NAT type in a game explains how well your device can communicate with the wider internet. On Xbox and PC, you'll see three types: Open, Moderate and Strict. On PlayStation, these are respectively known as Type 1, Type 2 and Type 3. The Nintendo Switch uses A, B and C, with D for connections that are heavily restricted and F if your console can't connect at all. NAT types are not an official network specification, which is why they vary across platforms.

An Open NAT means your gaming console or PC is directly connected to the internet and has no restrictions on what it can communicate with. (As explained above, this isn't actually NAT, but games still designate it as such.) Moderate indicates that your system is behind a router for its internet connection but is still able to communicate as needed. Finally, Strict means your system has necessary ports blocked and can't communicate normally.

What this means for your connections

Although Open sounds like it should be the goal, that's not really the case. Having your console or PC directly connected to the internet is impractical, as it would require you to connect your machine to your modem, preventing you from using a router to get every other device online unless you used a network switch. Importantly, it would also be insecure since you wouldn't have the firewall or other security features of your router protecting your network traffic.

With an Open NAT type, you can connect to anyone else; and with Moderate you can connect to other Moderate or Open players. Strict is the least compatible, as you can only play with those who have an Open NAT. Usually, someone with an Open NAT is chosen as the game host, while having a Strict NAT means you're more likely to see matchmaking errors, won't be able to join friends and similar.

Your experience is most affected by NAT type in games with peer-to-peer (P2P) connections rather than dedicated servers provided by the developer. However, even in games with their own servers, elements like in-game voice chat, custom lobbies, co-op campaigns and similar might still rely on P2P connections.

NAT type doesn't change your network speed or ping; it only affects who your console can talk to. Improving your router's download speeds is another matter.