WiFi is a brand name controlled by the Wireless Ethernet Compatibility Alliance (WECA). It confirms conformance to the IEEE 802.11b standard for wireless LANs, and ensures interoperability between all WiFi wireless LANs.
WiFi includes basic security features for authentication and privacy.
WiFi's privacy is based on WEP (wired equivalent privacy) encryption. It cannot be considered secure.
There are three ways (two 'official' and one 'unofficial') in which access control is provided. Firstly, each node in the standard 802.11 network uses a network name referred to as the Service Set IDentifier, or SSID. Users can be required to enter a combination of the SSID and a password before being granted access. Unfortunately, this can be easily sniffed and identified by drive-by hackers.
The unofficial method is similar in concept, but uses the unique Media Access Control (MAC) identifier that is part of every Ethernet device. Many WLANs can store lists of the MACs as access control lists within the APs (Access Points). But they are never encrypted, cannot be changed, and are easily sniffed.
The third approach is good old WEP again. It can be configured to require either a 40 bit or 128 bit key. However the same key is used for all devices, and, in the case of laptops, is stored on the laptop. This means that if any device is compromised (a laptop lost or stolen?), then the access password must be changed on ALL of the devices. Needless to say, WEP does not provide any management functions to make this any easier.
802.11b is not secure and will be replaced probably by a combination of 802.1x for authentication and a new AES algorithm for encryption.