Port knocking is usually implemented via some kind of daemon that watches the firewall logs for signs of the knock sequence and then modifying the firewall's configuration to permit access through a specified port. You might use it on your home firewall to allow you to access your home network from the office or to provide a temporary back door to a network and then close it again after use.
Generally, a sequence of three or more knocks is used to complicate the access. If a single knock were used, it would obviously be too easy. Guessing the right sequence of three or four port numbers, on the other hand, greatly reduces the likelihood that anyone would be able to guess their way into your network.
Port knocking is customizable. You can select the port numbers and change the sequence as often as you feel is needed. As Wikipedia points out, you aren't limited to using this technique to open ports. You might use port knocking to initiate a shell script set up to do just about anything -- restart your web server, start your backups or run a scan of some sort.
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