If your are setting up a LAN and do not know what you are doing, it is best to use Automatic Private IP Addressing (APIPA). You will need a switch or a hub. Plug all computers into it. All computers set to get there IP from DHCP will get a APIPA address. Most DSL modems provide DHCP and NAT services, so if you plug in you DSL modem to the switch all computers should be able to connect to the Internet and will have a non APIPA address.
Source(s):
http://www.petri.co.il/whats_apipa.htm
http://en.wikipedia.org/wiki/Network_switch
http://en.wikipedia.org/wiki/Dynamic_Host_Configuration_Protocol
http://en.wikipedia.org/wiki/Network_address_translation

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