ip tcp adjust-mss command

While a host will know the MTU of its own interface and possibly that of its peers (from initial handshakes), it will not initially know the lowest MTU in a chain of links to any other peers.
To get around this issue, IP allows fragmentation: dividing the datagram into pieces, each small enough to pass over the single link that is being fragmented for, using the MTU parameter configured for that interface.
RFC 1191 (IPv4) and RFC 1981 (IPv6) describe "Path MTU discovery", a technique for determining the path MTU between two IP hosts. It works by setting the DF (Don't Fragment) option in the IP headers of outgoing packets. Any device along the path whose MTU is smaller than the packet will drop such packets and send back an ICMP "Destination Unreachable (Datagram Too Big)" message containing its MTU. This information allows the source host to reduce its assumed path MTU appropriately. The process repeats until the MTU becomes small enough to traverse the entire path without fragmentation.
Unfortunately, increasing numbers of networks drop ICMP traffic (e.g. to prevent denial-of-service attacks), which prevents path MTU discovery from working. One often detects such blocking in the cases where a connection works for low-volume data but hangs as soon as a host sends a large block of data at a time
Most Ethernet LANs use an MTU of 1500 bytes (modern LANs can use Jumbo frames, allowing for an MTU up to 9000 bytes); however, border protocols like PPPoE will reduce this.
he difference between the MTU seen by end-nodes (e.g. 1500) and the path MTU causes path MTU discovery to come into effect, with the possible result of making some sites behind badly-configured firewalls unreachable. One can possibly work around this, depending on which part of the network one controls; for example one can change the MSS (maximum segment size) in the initial packet that sets up the TCP connection at one's firewall.

Sometimes the demands of efficiency encourage artificially declaring a reduced MTU in software below the true maximum possible length supported - for example: where an ATM (Asynchronous Transfer Mode) network carries IP traffic. Some providers, particularly those with a telephony background, use ATM on their internal backbone network.

ATM operates at optimum efficiency when packet length is a multiple of 48 bytes. This is because ATM is sent as a stream of fixed-length packets (known as 'cells'), each of which can carry a payload of 48 bytes of user data with 5 bytes of overhead for a total cost of 53 bytes per cell. Artificially declaring a reduced MTU in software maximises protocol efficiency at the ATM layer by making the ATM AAL5 total payload length a multiple of 48 bytes whenever possible.
RFC 2516 prescribes a maximum MTU for PPPoE/DSL connections of 1492: a PPPoE header of 6 bytes, leaving enough room for a 1488 byte payload, or 31 full ATM cells.

The TCP MSS Adjustment feature enables the configuration of the maximum segment size (MSS) for transient packets that traverse a router, specifically TCP segments in the SYN bit set, when PPP over Ethernet (PPPoE) is being used in the network. PPPoE truncates the Ethernet maximum transmission unit (MTU) 1492, and if the effective MTU on the hosts (PCs) is not changed, the router in between the host and the server can terminate the TCP sessions. The ip tcp adjust-mss command specifies the MSS value on the intermediate router of the SYN packets to avoid truncation.

When a host (usually a PC) initiates a TCP session with a server, it negotiates the IP segment size by using the MSS option field in the TCP SYN packet. The value of the MSS field is determined by the maximum transmission unit (MTU) configuration on the host. The default MSS value for a PC is 1500 bytes.
The PPP over Ethernet (PPPoE) standard supports a MTU of only 1492 bytes. The disparity between the host and PPPoE MTU size can cause the router in between the host and the server to drop 1500-byte packets and terminate TCP sessions over the PPPoE network. Even if the path MTU (which detects the correct MTU across the path) is enabled on the host, sessions may be dropped because system administrators sometimes disable the ICMP error messages that must be relayed from the host in order for path MTU to work. The ip tcp adjust-mss command helps prevent TCP sessions from being dropped by adjusting the MSS value of the TCP SYN packets. The ip tcp adjust-mss command is effective only for TCP connections passing through the router. In most cases, the optimum value for the max-segment-size argument is 1452 bytes. This value plus the 20-byte IP header, the 20-byte TCP header, and the 8-byte PPPoE header add up to a 1500-byte packet that matches the MTU size for the Ethernet link.
If you are configuring the ip mtu command on the same interface as the ip tcp adjust-mss command, it is recommended that you use the following commands and values:
ip tcp adjust-mss 1452
ip mtu 1492

Example:
XXXNR>enable
XXXNR#conf t
Enter configuration commands, one per line. End with CNTL/Z.
XXXNR(config)#interface vlan 104
XXXNR(config-if)#ip tcp adjust-mss 1250
XXXNR(config-if)#end
XXXNR#copy run start

References:
http://www.cisco.com/en/US/docs/ios/12_2t/12_2t4/feature/guide/ft_admss.html
http://en.wikipedia.org/wiki/Maximum_transmission_unit
http://help.expedient.net/broadband/mtu_ping_test.shtml
> MTU Ping Test