How Bluetooth Works - Personal Area Network

Personal-Area Network (PAN) or Piconet

When two or more Bluetooth devices, sharing the same profile(s), come in range of one another, they establish a connection automatically. So, the user doesn’t have to press any buttons or set anything up. Once the Bluetooth devices are all connected, a network is created.
Bluetooth devices create a Personal-area Network (PAN), or commonly called a piconet (It is important that you know and remember what a piconet is, because we refer to it a lot throughout the rest of this site).
Bluetooth piconets are designed to link up to eight different devices. A piconet can be as small as a two foot connection between a keyboard and computer, or it can encompass several devices over an entire room.
Furthermore, it is possible for multiple, distinct piconets to be operating in the same room at any given moment. Devices that are apart of a specific piconet, based on their profiles, use “Hopping” simultaneously so they stay in touch with one another and avoid other piconets that may be operating in the same room.
In order to regulate communications one of the participating devices is assigned the role of "master" of the piconet, while all other units become "slaves" (Talk about a harsh name). Masters have the duty of directing and controlling communications, even between two slave devices.
Under the current Bluetooth specification, up to seven slaves and one master can actively communicate. Furthermore, in order to extend these networks, several piconets can be joined together in what is known as a scatternet.
In theory, anyone with a compatible Bluetooth device is supposed to have the ability to hook up anywhere within that network and connect to another Bluetooth device.

Extended Synchronous Connection Oriented Links

It is a long term, but here is what it means:
With the introduction of Bluetooth version 2.0 + EDR (Enhanced Data Rate), the latest of the Bluetooth Core Specification Versions, the ability to form larger more diverse piconets is greatly improved.
One factor that contributes to more improved piconets is the addition of the extended Synchronous Connection Oriented (eSCO) link type. The eSCO link type allows Bluetooth devices to monitor and retransmit voice packets to improve the quality of the link. This is an especially important advancement to wireless devices that transmit audio data, like stereo headphones and headsets.