Use Software for Sharing an Internet Connection
Your MacBook can act like an AirPort/AirPort Extreme Base Station, providing both wireless Ethernet connectivity for other computers on the LAN and a shared Internet connection. Lion also has built-in software that allows a single computer on your network to share its Internet connection with others on the LAN.
To share your Internet connection, follow these quick steps:
Click the System Preferences icon in the Dock.
Click the Sharing icon.
Click the Internet Sharing entry in the list on the left side of the pane.
This brings up the settings shown.
Click the Share Your Connection From pop-up menu and choose Ethernet.
Select the Ethernet check box (in the To Computers Using list) to enable it.
When you do, you’re issued a warning that enabling this could affect your ISP or violate your agreement with your ISP. In my experiences, this step has never caused any networking problems. However, if you have any doubts, contact your ISP and verify this.
Click OK in the warning dialog to continue.
You go back to the Sharing dialog, where you’ll notice that the Internet Sharing check box is conveniently ready for you to select it — feel free to click it now.
If you’re using a dial-up modem to access the Internet, you need to also make sure that the computer that has the modem also has an Ethernet or wireless LAN connection. Unfortunately, MacBook models capable of running Lion don’t have a built-in modem, but if you buy a Lion-compatible external USB modem, you can still use this feature.
If you’re using a cable or DSL modem for your Internet connection, the Mac that you want to run the sharing software on should have two Ethernet connections: one to connect to the cable/DSL modem and one to connect to the rest of the LAN.
The main disadvantage to using a software solution for Internet connection sharing is that the computer that connects to the Internet must be turned on and ready to go all the time so that others on the network can get to the Internet.
And although the sharing software operates in the background on the machine it’s running on, it still chews up some of the Mac’s processing power and memory, so it could slow down other applications that you’re running on that computer.