Some bits & pieces that might help:
Every network card has its own unique serial number, called its MAC address (Media Access Control address). To connect onto a network it must have a unique network address assigned to that MAC address. This can be done 'on the fly' for a limited duration as the card tries to connect to the network using a protocol called Dynamic Host Control Protocol (DHCP) or it can be permanently set within the network. Somewhere in the network there needs to be a device that controls such things for DHCP *or* each machine must be told what its address will be. DHCP is what is used for ad-hoc connections because it is convenient & requires little intervention from the user.
Think 'plug the wire into one network card, plug the other end into the network controller and the two will talk to each other. The DHCP host listens for a request for an address from each network card (ie MAC) that is connected, assigns a unique network address ('IP' eg 192.168.1.1) to each MAC & keeps track of them'. The machines are now capable of talking to each other. It could be via a wired network, or via a wireless network. Each device is *supposed* to only listen for data tagged with its own address.
If the network uses only wires then it's more difficult to tap in to it compared to a wireless network. Some network machines (switches) will only send the data down the wire that is connected to the MAC/IP combination. Other systems broadcast the tagged data packets down all the wires & each device grabs whatever packets are tagged with their address. Even a broadcast system is limited to the machines that have been plugged in.
A wireless connection is more akin to a wired but broadcast system but one where anyone can 'plug in' at anytime. This leads to the problems of how a wireless network can announce itself and how a device can connect and be uniquely identified while preventing unwanted devices to connect - hence the encryption methods WEP & later, WPA.
WEP has a flaw in its design that causes it to require each device to broadcast enough information that over time a nefarious person can reconstruct the encryption key that's being used to keep others out and join the network.
WPA uses a different method & also a key that is longer and therefore more difficult to calculate.
Some things that you can do to secure the wireless network:
1. Don't have the network announce itself. To the casual user, an un-announced network is invisible although not to those with the correct tools. In your WiFi router you need to switch off the function that announces the network name. In your PC you'll need to tell it what network name to connect to
2. Use WPA instead of WEP. Use the longest key that all machines you want on the network can use.
3. Limit the network connections to *specific* machines ie MACs. This facility is built into the WiFi router.
4. Some WiFi routers have directional antenna or allow you to reduce the signal strength. The worse the signal that escapes your building the more difficult for someone to eavesdrop.
5. Use a wired network...
