Taken from another forum
Your router will be given it's own IP address (for example 192.168.0.1) the other computer(s) will connect to, this is known as the default gateway. It will also have a subnet class (normally 255.255.255.0).
Each computer has it's own unique IP either generated off that (for example 192.168.0.102, 192.168.0.103, etc) or are manually added. If these aren't different you will have issues when both computers connect at the same time. The same subnet class is needed to join the network.