Multiplexing (or muxing) is a way of sending multiple signals or streams of information over a communications link at the same time in the form of a single, complex signal; the receiver recovers the separate signals, a process called demultiplexing (or demuxing).
Networks use multiplexing for two reasons:
To make it possible for any network device to talk to any other network device without having to dedicate a connection for each pair. This requires shared media;
To make a scarce or expensive resource stretch further -- e.g., to send many signals down each cable or fiber strand running between major metropolitan areas, or across one satellite uplink.
In analog radio transmission, signals are commonly multiplexed using frequency-division multiplexing (FDM), in which the bandwidth on a communications link is divided into subchannels of different frequency widths, each carrying a signal at the same time in parallel. Analog cable TV works the same way, sending multiple channels of material down the same strands of coaxial cable.
Similarly, in some optical networks, data for different communications channels are sent on lightwaves of different wavelengths, a variety of multiplexing called wave-length division multiplexing (WDM).
These techniques are all basically use the same concept. FDM describes fields that traditionally discuss frequencies (like radio and television broadcasting). WDM is used in fields that traditionally talk about wavelengths, like telecommunications and computer networks that use laser systems (which generate the signals sent over fiber optic cables). Variations include coarse WDM (CWDM) and dense WDM (DWDM), which put relatively fewer or more channels of information, respectively, on the medium at the same time. Other variations use light polarization to multiplex.
In digital transmission, signals are commonly multiplexed using time-division multiplexing (TDM), in which the multiple signals are carried over the same channel in alternating time slots. For example, TDM is used on SONET links that used to be a mainstay of enterprise WAN and Internet connectivity.
Code Division Multiplexing (CDM) uses identifying codes to distinguish one signal from another on a shared medium. Each signal is assigned a sequence of bits called the spreading code that is combined with the original signal to produce a new stream of encoded data; a receiver that knows the code can retrieve the original signal by subtracting out the spreading code (a process called dispreading). CDM is widely used in digital television and radio broadcasting and in 3G mobile cellular networks. Where CDM allows multiple signals from multiple sources, it is called Code-Division Multiple Access (CDMA).