Does it any good for security, if so why developers put it in, in the first place? I just started learning about iptables and i wonder why there is such an option? What does it do?

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Well, I think you can answer your first question by yourself by comparing the security with and without blocking incoming connections from any ip address. Yes.

Now, you have the possibility of dropping or blocking connections. If you set the behaviour on dropping, when someone tries to connect (s)he wont notice you even exist. If you set it on blocking, the person will see that it's not allowed.

If you want to read a bit more, I personally like geek-guide page or the archlinux wiki page.

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