WiFi Standards
The original IEEE standard was the 1 and 2 Mbps of 802.11, which ran at a frequency of 2.4GHz, as do almost all the many later variations on 802.11. As standards go, there sure seem a lot of them.
802.11b was the first upgrade, it runs faster, at 5.5Mbps and 11Mbps, but still at 2.4GHz. It uses a spread spectrum technique. Range is 100 or more metres. The Wireless Ethernet Compatibility Alliance (WECA) certify 802.11b compatibility and allow use of the WiFi (Wireless fidelity) brand name.
The 83 MHz wide 802.11b band uses 11 channels of 22 MHz wide, so only 1, 6 and 11 do not overlap. You can change the setup on each WiFi card so they use the same channel, if it turns out someone else nearby is using the default channel. The denser the population, the more likely this is.
As at 2003, it looked like WiFi had won the radio connection battle, with a variety of much better priced products, even faster variations, and a lot of support. Note that WiFi is inherently insecure, especially as delivered.
802.11a isn't compatible, as it runs at 54Mbps and at 5GHz. It has 12 non-overlapping channels.
802.11e is intended to be backwards compatible with both a and b.
802.11f is intended for roaming between multiple wireless access points.
802.11g speeds up 802.11b to 54Mbps, but stays at 2.4GHz.
You should also note that most IEEE 802.11 (WiFi) wireless LANs also operate in the same 2.4 GHz band as Bluetooth, however Bluetooth's design makes it likely that it will not be as subject to interference as WiFi. The 2.4 GHz unlicenced band is used by all manner of industrial equipment, including household microwave ovens and cordless phones. Interference is very likely as the density of devices increases.
WiFi Equipment
This was expensive gear in mid 2001. I've seen a 3Com Home Wireless Gateway with 3 wired 10/100 Ethernet ports at A$750 from Harris Technology. Also a 3Com wireless PC Card at A$395. By mid 2003 it was down a bit, but still costly. For example, a Booya BWSC23 CCard was A$265. A Netgear WAB102 dual band access point was A$742. A Booya BWMR15 access point however was A$290.
WiFi Performance
Unfortunately, compatibility from device to device remains poor, documentation rudimentary and software a problem. Given reviews show many pieces of equipment too over three hours to configure, I'd avoid anything that wasn't specifically reviewed and said to be easy and quick to configure.
Performance was all over the place, with speeds at a mere 1 metre range going from lows of around 2.5 Mb/sec to highs over 17 Mb/sec (for the same brand, but different models). At 15 metres the performance more than halved
Throughput can be affected by large metal objects, antennas being behind computers or low to the floor, by walls, and so on. Experiment. Signal strength decreases with distance.
Programs like NetStumbler will show signal strengths on WiFi networks.
Ad Hoc Mode
If you only have two computers, you may be able to set their WiFi cards in what is known as Ad Hoc mode. This is pretty much like using a crossover Ethernet cable, instead of using an Ethernet switch.
WiFi Network
Normally you would have an access point to which each computer would connect wirelessly. You could have this connect to the internet via a computer. Most prefer that the access point act as a router and connect direct to the internet (via an Ethernet connection to say an ADSL or Cable modem), and provide a built in firewall and Wired Equivalent Privacy (WEP) for security.
A desktop computer would have either a PCI WiFi card, or a USB WiFi dongle.
A notebook computer would typically have a PCCard WiFi card.
Setting Up WiFi
Connect your ADSL or cable modem Ethernet to the WiFi access point router. This may require a crossover cable (wires 1-3 crossover, also 2-6 crossover), or simply a regular passthrough connection via an Ethernet switch. Connect your computer browser to the access point, typically using an IP address like //192.168.0.1 (the manual should say what to use). You should get a login display. The default login should open a configuration utility. The router will probably fake up using the Media Access Control (MAC) address of your original network adaptor used by your internet connection. It should assign IP addresses to other computers using DHCP.
If this is your only access point, it should be configured as a root bridge. If you are spread over a wider area and using multiple access points, it should be set as a repeater.
WiFi Security
I get the impression there isn't any by default. There is a server based security standard 802.1x on the way. Some manufacturers have proprietary security standards, so if you want to use that, all your WiFi gear needs to come from the same manufacturer (so much for compatibility).
Your wireless devices will log in using a Service Set Identifier (SSID). Change this from the default, and mix letters and numbers, just like you would for a password.
Wired Equivalent Privacy (WEP) should be enabled. The same hexadecimal string must be used on each device. There seem to be performance problems with older gear when using 128 bit WEP or 256 bit, so many networks run with the less secure 64 bit WEP, or even the original 40 bit. These can't be considered secure.
Use Media Access Control (MAC) address filtering. This is an individual and different 48 bit hardware identifying number built into every single piece of network equipment. Under Windows, running either ipconfig /all (command line) or winipcfg (Windows utility) will tell you the physical address. Don't forget you may have multiple adaptors, so check you have the right one showing. A hacker can sniff the MAC address and fake it, but it does raise the level of complexity of an attack.
Network layer IP filtering can be added, especially to router access points, to filter out IP addresses you don't know about. Check the IP addresses of all your wireless devices, and allow them in the access point configuration. Also the IP addresses of all your wired (Ethernet) devices.
Other possibilities are Extensible Authentication Protocol (EAP), which uses session based WEP keys after a login. Virtual Private Networks (VPN) use encryption and tunnelling, and are very safe, but they may not work with all other networks.