Wireless Distribution System (aka. WDS) is a (broken) feature enabled in the Intersil 802.11b silicon which allows AccessPoints to talk directly to other AccessPoints via a 2Mb backchannel.
The HostApMode drivers have figured out a work around for the brokeness and now LinuxAccessPoints can talk to each other. There are some limitations (all AP's must be on the same channel) and some quirks.
The best discussion of it that I know of took place on the PersonalTelco MailingList. -- AdamShand