Mesh Networking Explained
Whereas the Internet is mostly a wire-based, co-operative electronic communication infrastructure..., Mesh is a wireless co-operative communication infrastructure between a massive amount of individual wireless transceivers (i.e. a wireless mesh) that have Ethernet type capabilities. This type of infrastructure can be decentralized (with no central server) or centrally managed (with a central server). Both are relatively inexpensive, and very reliable and resilient, as each node needs only transmit as far as the next node. 
Nodes act as repeaters to transmit data from nearby nodes to peers that are too far away to reach, resulting in a network that can span large distances, especially over rough or difficult terrain. Mesh networks are also extremely reliable, as each node is connected to several other nodes. If one node drops out of the network, due to hardware failure or any other reason, its neighbours simply find another route. Extra capacity can be installed by simply adding more nodes. Mesh networks may involve either fixed or mobile devices. The solutions are as diverse as communications in difficult environments such as emergency situations, tunnels and oil rigs to battlefield surveillance and high speed mobile video applications on board public transport or real time racing car telemetry. The principle is similar to the way packets travel around the wired Internet — data will hop from one device to another until it reaches a given destination. Dynamic routing capabilities included in each device allow this to happen.
To implement such dynamic routing capabilities, each device needs to communicate its routing information to every device it connects with, "almost in real time". Each device then determines what to do with the data it receives — either pass it on to the next device or keep it. The routing algorithm used should attempt to always ensure that the data takes the most appropriate (fastest) route to its destination.
Source:
Wireless mesh network. (2007, August 8). In Wikipedia, The Free Encyclopedia. Retrieved 14:49, August 11, 2007, from http://en.wikipedia.org/w/index.php?title=Wireless_mesh_network&oldid=149957285