You can install a wireless router and still have DSL service. You may occasionally have to hook up to the wireless router with a wire to change some security settings, etc., but that should be a rarity. You would not need the PC at all. I'm not sure of what you're calling the "modem". There is the box which connects to the wall; many people call that the "modem" and you will need to keep that or you won't get DSL service.

Other applications? Well, there are wireless music/video servers or devices which will route either digital files or even Internet radio/video to your stereo or TV. There are some digital cameras now which can communicate via Wi-Fi (your wireless) to store pictures (though, truth be told, that's more of a gimmick than a real advance). There's VOIP (Voice Over Internet Protocol), which allows you to make voice phone calls over the Internet, which requires a fast connection like DSL or cable.

Keep in mind, however, that there is a limit to DSL bandwidth, and usually information you send to the Internet moves far more slowly than what you receive from the Internet. Another consideration is that wireless signals have a somewhat limited range, so you either need to make sure there is enough signal where you want it (this can be achieved; it's mostly a matter of a little money) and/or that you secure the wireless signal from snoopers and neighbors who might "see" your wireless and piggyback onto it or try to get into your computer(s).

Yet another consideration is that there are different "flavors" of wireless (typically following what is called the "802.11 standard"). There's 802.11a (rarely found in homes); 802.11b (the first popular residential wireless); 802.11g (much faster than b); and -- soon -- 802.11n, which promises to be faster and have an even better signal, but which hasn't been nailed down as a standard yet, so it's IMHO a little early to buy a "Wireless-n" router. The only thing to think about there is if you have a lot of devices connecting to the wireless router -- most routers will slow down every device to the speed of the slowest 802.11 that any of them use. This may be an issue if you're streaming video wirelessly and someone connects to your network with an old 802.11b wireless card. This shouldn't be a showstopper, though.

Anything else? :-)

Thanks a lot. This answered a lot of questions for me and gave me info on stuff I didn't even know about.