I've connected a Pi directly to my iMac via Ethernet cable. The Pi has an address 169.254.121.172 and the iMac has an address 169.254.10.117. I can connect to the Pi via SSH and can ssh back to the Mac ok. Internet sharing has been turned on (sharing Wi-Fi to Ethernet). I just can't resolve any addresses on the Internet. I have added the iMac's IP as a gateway and when I traceroute to 220.127.116.11 I can see it hitting the iMac but the packets get no further. There is a bridge0 which has an IP 169.254.10.117 and it does resolve when pinged from the Pi. I'm running Yosemite 10.10.5. Ideas anyone?
the 169.254.x.x address space is known as Link-Local addressing & by definition does not leave the building.
In a computer network, a link-local address is a network address that is valid only for communications within the network segment (link) or the broadcast domain that the host is connected to.
Link-local addresses are usually not guaranteed to be unique beyond a single network segment. Routers therefore do not forward packets with link-local addresses.
Source : Wikipedia - Link-local address
A link-local address is usually self-generated by a computer if it cannot find a DHCP server.
If your network has no DHCP server [your router ought to contain one] then you need to use manually-assigned addresses in the same subnet as your router/gateway. Nominally, for a home or small business, these would be in the 192.168.x.x space.