A wireless distribution system (WDS) is a system enabling the wireless
interconnection of access points in an IEEE 802.11 network. It allows a
wireless network to be expanded using multiple access points without the
traditional requirement for a wired backbone to link them. The notable
advantage of WDS over other solutions is it preserves the MAC addresses of
client frames across links between access points. This is mandatory for
certain application such as a wireless Point of Sales system as the
handheld terminals need to authenticate with the POS server via its MAC
address. 

All devices in a wireless distribution system (WDS) must be configured to
use the same radio channel, method of encryption (none, WEP, or WPA) and
the same encryption keys. WDS also requires every device to be configured
to forward to others in the system by entering the corresponding MAC
addresses in a table called the WDS Link Settings in the below diagram.

WDS may also be considered a repeater mode because it appears to bridge
and accept wireless clients at the same time. However, with this method,
throughput is halved for all clients connected wirelessly.

Compatibility between different brands or different models of the
same brand of Access Point is not guaranteed. It is recommended that
the WDS network be created using the same models of the same brand for
maximum compatibility.