802.11a/g uses OFDM (Orthogonal Frequency Division Multiplexing) to transmit data. OFDM breaks down the signal into 52 sub-carriers (within the 20 Mhz channel) that are then transmitted simultaneously at different frequencies to the receiver. This helps to overcome signal loss caused by reflections and fading. The subcarriers do overlap each other, but they do not interfere with each other due to the fact they are orthogonal. The actual signal modulation is done using PSK or QAM.
802.11b (and 802.11g when in fallback mode) transmits data using DSSS (Direct Sequence Spread Spectrum). This method spreads the signal over the 20Mhz channel using a pseudo-random code. This helps to minimize the effects of any narrowband interferers in the 2.4 Ghz spectrum (such as cordless phones or microwave ovens). The actual signal modulation is done with CCK. PBCC is an alternative modulation scheme.
