Although BSD and its source code was freely available under the original BSD licenses, but it only covered the portion of the code which copyright was owned by Regents of the University of California. BSD as a whole, was "encumbered" - all BSD releases up to 4.3BSD-Tahoe and 4.3BSD-Reno contained proprietary AT&T code owned by Unix System Laboratories (USL) - a subsidiary of AT&T. As a result, the BSD operating system was not freely available, since it was not legal to run BSD without obtaining an Unix license from AT&T.
The first "unencumbered" BSD release free from such restrictions was BSD Net/1, which was a BSD release based on 4.3BSD-Tahoe. By removing all proprietary AT&T code, the entire system became freely available, an AT&T's Unix license was not required and users were not subjected to any additional restrictions aside from the BSD license itself. Similarly, BSD Net/2 was an "unencumbered" release of 4.3BSD-Reno (although USL argued on the court that it still contained proprietary AT&T code, the lawsuit finally settled largely in Berkeley's favor).
Finally, BSD 4.4-Lite and BSD 4.4-Lite2 were released after the lawsuit has been settled. As a result, they are considered unencumbered and free from legal threats.
The following graph shows the relation of different "unencumbered" BSD releases - encumbered BSDs are colored yellow, and unencumbered BSDs are colored green (Source link, author: Eraserhead1, Infinity0, Sav_vas on Wikimedia Commons, CC BY-SA 3.0 Unported).
These "unencumbered" releases proved to be crucial to the continued development, innovation and mass adoption of the BSD operation systems, and were directly responsible to the later projects, such as 386BSD, NetBSD, FreeBSD and OpenBSD, as their starting points.
What AT&T code was removed in BSD Net/1, BSD Net/2, BSD 4.4-Lite, and BSD 4.4-Lite2 from the original 4.3BSD? By removing the AT&T code, what was its impact on the features and functionalities of BSD? Was it a complete removal, or was it a partial replacement with reimplementation of affected features?
In particular, BSD Net/1 and BSD Net/2 is the version-of-interest here, since they were released prior to the legal settlement and the removal of AT&T code can be considered an independent development, unlike BSD 4.4 Lite (/2), which was influenced by the legal settlements that granted Berkeley rights to distribute some files that USL claimed copyright on.