you connect to say 2 other clients, the searches coming from one go through yours and to the other. if you have a file then you respond back but still pass the search on. the more clients you are connected to the better, up to your network speed that is. Just set it to 2 or 3 for a dial up connection and maybe 4 or 6 for cable modem. the connection for a download or upload are direct to that particular computer and are probably not to the 2 computers you are connected to for the network. did I make any sense?
look around zeropaid.com or other sites for more documentation that explains how it all works.