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> Why is it necessary to allocate the memory dynamically?
> Couldn't the caller provide the memory on the stack (i.e.
> through a local variable)?

Local variable is not very good IMHO since in threading 
environment with hundreds of threads running at the same 
time stack can be a scarce resource. Another issue is that 
the caller doesn't know the actual size it has to allocate 
until the resolution has been done, therefore it would need 
to overallocate in most cases.

-Maxim