This describes the basic requirements for a wired network. We will cover wireless networking next.
If you want to connect two computers, all you need is a "crossover cable" (or "twisted pair") and an interface in each computer. A crossover cable is an Ethernet cable that has a pair of wires that cross somewhere between the ends (see illustration). Usually, the wires inside an Ethernet cable go "straight-through." When constructing a network, you usually want to use straight through Ethernet cables, except when you are connecting one computer directly to another.
You can plug each end of the cable into each computer, and you have a very simple network! You should follow your operating system's directions for proper configuration instructions. You can share files and a printer, and if you have Internet Connection Sharing set up, your Internet connection as well.
Internet Connection Sharing (ICS) allows one computer to establish a connection to the Internet, and another computer on the network can access the Internet through the first computer. Windows 98SE or later support ICS. You should consult operating system's documentation for information on how to configure ICS. If it is not built into your operating system, USR has links to shareware that will allow you to run ICS on your computer.
You should run a firewall on the computer that manages the Internet connection. Firewall software monitors the traffic passing through and prevents unauthorized outsiders from accessing your files.