[bvk]

how two computers can be connected and data transfer between them takes place?

[born2c0de]

There are many ways you can do this besides what I've mentioned below.

• Buy a router and connect the two computers to the router.
  
• Buy a crossover cable and plug both the ends into the ethernet ports of both computers.

[JamesConley]

If the computers are already connected to a router and setup then you can configure one machine and map the network drive, the are a fews to do this.

However to get started I would just run through something as simple as this http://bit.ly/aSbjF7 Which is a link that I share with many people looking to accomplish this form of sharing. If you are having problems or have questions feel free to contact me.
Keep in mind you can also share external HD this way on your local network.

[mrloserskid]

if they are on the same network (with a router) just make a shared file. (right clik on a folder select sharing, in blue text click share this fodler and click i dont care just share.

if not on a router connect the computers with etherent cord, go to control pannel network connections (somthing like that) right click on your connection edit the button thing that says tcp/ip make a ip for both computers but the last number has to be diffrent, use the defult subnet 255.255.255.0.
theres lots of help for this on google.
works in vista the same way. (not 7)