I was not getting the desired output with below trigger.
Please correct the trigger.

CREATE TABLE dbo.MyTable
(
     MasterIp varchar(255) NOT NULL
          CONSTRAINT PK_MyTable PRIMARY KEY
     ,status1 tinyint NOT NULL
     ,status2 tinyint NOT NULL
     ,Active_status tinyint NOT NULL
)
GO


CREATE TRIGGER dbo.TR_MyTable_IU
ON dbo.MyTable
AFTER INSERT, UPDATE
AS

IF @@ROWCOUNT = 0 RETURN;
SET NOCOUNT ON;

-- Rows with parents
UPDATE T
SET status2 = COALESCE(P.status2, T.status2)
     ,Active_status = COALESCE(P.Active_status, T.Active_status)
FROM MyTable T
     JOIN inserted I
          ON T.MasterIp = I.MasterIp
     OUTER APPLY
     (
          SELECT TOP 1 status2, Active_status
          FROM MyTable T1
          WHERE T.MasterIp LIKE T1.MasterIp + '.%'
              AND T.MasterIp > T1.MasterIp
          ORDER BY T1.MasterIp DESC
     ) P;

-- Rows with Children
UPDATE C
SET status2 = T.status2
     ,Active_status = T.Active_status
FROM MyTable T
     JOIN inserted I
          ON T.MasterIp = I.MasterIp
     JOIN MyTable C
          ON C.MasterIp LIKE T.MasterIp + '.%'
              AND C.MasterIp > T.MasterIp;
GO

INSERT INTO dbo.MyTable
VALUES('5.46.200.1.462222.2.1.1.1.1.1', 0, 0, 1);

select * from MyTable;

INSERT INTO dbo.MyTable
VALUES ('5.46.200.1.462222.2.1.1.1.1.1.1', 0, 1, 1);

select * from MyTable;

UPDATE dbo.MyTable
SET status2 = 3
     ,Active_status = 3
WHERE MasterIp = '5.46.200.1.462222.2.1.1.1.1.1';

select * from MyTable;


Note:when i added the below insert it should not update the values 0,99 for the other masterip since masterip '5.46.200.1.462222.2.1' does not have immediate children.

INSERT INTO dbo.MyTable
VALUES('5.46.200.1.462222.2.1', 0, 9, 9);

select * from MyTable;


Expected output should be:

MasterIp	               status1	status2	Active_status
------------------------------ -------  ------- ------------
5.46.200.1.462222.2.1.1.1.1.1	 0	 3	  3
5.46.200.1.462222.2.1.1.1.1.1.1	 0	 3	  3
5.46.200.1.462222.2.1	          0	 9	  9

drop table  MyTable