That's Internet Connection Sharing. One machine in the network is connected to the Internet. Other machines connect to that machine (sort of proxy). It dates from the good old days of dial-up when there were no multi-PC routers, so it was a physical necessity (only one machine could be connected to the phone line).

ICS is still supported on XP. But it's somewhat clumsy to setup. I've once seen it working (setup by a professional) and read many, many posts here from people who couldn't.