Android WiFi HotSpot/Access Point

I've seen a lot of apps that turn a regular Android phone (Froyo 2.0+) into a WiFi access point. I've tried to understand how this works by trying to recreate the program but so far have not been able to. I know, for example, that it is possible to accomplish this w/o privileges (see pdanet <[login to view URL]> as an example). I would like to understand this so this project is for example code that I can run on my HTC G1, running Froyo 2.0 or better. Important features are: 1. The app It should NOT require privileges or that the phone be rooted. I should be able to install it just like any other Android app, similar to pdanet. 2. It should create a WiFi hotspot on the Android that I can see (just like any other hotspot) using a WiFi sniffer Once I understand this piece, I will probably need help with understanding how a device can connect to this hotspot and perform some simple operations. It is OK to use open source code for this since this is just for me to understand the mechanisms involved.