The "Fast Lane" Answer
Addresses are funny things. They're kind of like Schrödinger's cat*—it's impossible to tell if they are real or not real without checking. Luckily, checking to see if an address is real doesn't require any radioactive materials (so put your Geiger counter down).
It's a method called "address validation," though sometimes it goes by other names (address verification, CASS processing, etc.), and it's what we do here at SmartyStreets. Basically, we take the info in the USPS database—and similar records kept in other countries—and offer it to you via a user-friendly interface. So if you're looking to double-check an address, you've come to the right place.
*No cats were harmed in the making of this article.
The "Scenic Route" Answer
Address validation is actually remarkably simple. First, countries with organized mail systems keep records of who is signed up to receive mail. You sign up with them when you want to start getting mail. That record, usually maintained by a government organization (the United States Postal Service, for example), is the most authoritative, reliable, and up-to-date record available.
That record is where it all starts. It serves as a data point that can be used as a reference, proving whether or not an address is real.
The act of comparing an address to the database to see if it's real is called "address validation," as mentioned above. It's kind of like asking a postman if he delivers mail to a particular address, except it's a lot faster. Using APIs and specialty programs, address validation companies compare the addresses you give them to the relevant database. If there's a match, the system you're using will notify you that the address is valid. If not, you're given a thumbs-down to let you know that the postal service doesn't deliver mail to that location.
Reasons an Addresses Doesn't Validate
At this point it's important to mention that just because a physical address is being used doesn't mean it will validate. Here are a few common reasons why an address may not validate, even if you could swear on your dead cat that it's a real place.
Not registered: If the address isn't signed up with the postal service, then there's no record of it in the system. Whether it's a house that people just moved into, or a business that just opened, the paperwork has to be done for that address to "exist" in the database. The same logic applies to homes/businesses that are currently unoccupied, and places that have never signed up for mail.
PO Boxes: Some rural areas run on a PO Box system, rather than one that ties to physical addresses. In these cases the physical address doesn't receive mail from the postal service, and thus is not technically "valid." Checking the PO Boxes will score you a "valid" response, but the physical home and business addresses will not. Even though the residents of that physical address are signed up with the postal service to receive mail, they did so using a PO Box.
The exception to this rule is places that offer both a PO Box and a physical address. As long as mail is delivered to both places, the brick-and-mortar location will come up as valid, as will the PO Box address.
Outside Service Area: There's the rare chance that the location you're trying to validate might exist in an area not serviced by the postal service. Carriers like UPS and FedEx may still deliver there, but that doesn't mean the postal service will, and that's who keeps the record.
Incorrect Input: Sometimes the Problem Exists Between Chair and Keyboard—or PEBCAK, as the techies call it. It means you messed up. If there's a human error (some mistake made in how the address is entered), it may come up as invalid. So double-check your work and make sure your information is correct and complete; the address isn't out of superposition yet.
So Now You Know . . .
Addresses can be checked for validity, and you can avoid the hassle of paying for postage on mail that's just going to be returned to you. The process is simple, and there are a number of different providers; finding someone who fits your needs is just a matter of shopping around.
You may find that the address validation system of a postal service (regardless of nationality) may be difficult for you to use. But there are those who have already navigated the difficulties for you, and they can get you the data you need. So the next time you want to make sure an address is real, the answer is simple: Just check with an address validator, and then you'll know.
And knowing is half the battle . . . unless you're Schrödinger's cat.