The main steps to set up an ethernet are:
By the way, further information about setting up an ethernet can be found at Ethernet-HOWTO. Don't forget to check it.
Now let's explain the steps a bit further...
Just have a look at to my page dedicated to the topic.
Well...it's the hardest part of the process. It took me 5 sleepless nights and hundreds of $'s (the cost of coffee, cigarettes, doctor etc...) to learn it. Don't be afraid after I learned, I have realized that it wasn't so hard. It's just about compiling the kernel the correct way. Firstly, you should know a lot about your ethernet card. Is it ISA, PCI or is it NE2000 compatible, or 3Com etc... It is harder to get a PCI card detected so if you have an oportunity to choose choose the ISA one. Some cards have Flash Roms and can be configured with a diskette under MS-DOS. You can choose which I/O ports or which IRQ's to use with it. Don't forget to check that. Some cards have jumpers, use them to configure your card. After you configured your card and started compiling the kernel you' ll see some networking options. Find your card there and compile the kernel with that option chosen. That's it. Easy isn't it? The main reason for facing problems is knowing not much about your card. By the way, don't prefer to use PNP cards. Because PNP is a Windoze standart, Linux can't get well with them. You may be successfull but you'll probably need to get close to an another package called isapnptools...Wish you luck... If you get your card detected by Linux you'll get a printing at the starting screen like...
NE*000 ethercard probe at 0x280: 00 20 18 65 39 46 
   eth0: NE2000 found at 0x280, using IRQ 9.
IP adress can be thought as postmail adresses of the machines. Like every home in the town has an adress computers have IP's. You should think of an IP adress for every computer in your network. 192.168.0.1 may be a good choice for the server. The terminals can be 192.168.0.2 and so on... Now it's time to edit some file. Write the all of the IP adresses of the machines on your network to the file /etc/hosts . A sample hosts file may be usefull.Secondly edit the /etc/sysconfig/network-scripts/ifcfg-eth0 file on your machine. NETMASK for our example is 255.255.255.0 and NETWORK is 192.168.0.0 . BROADCAST is 192.168.0.255 . Just have a look at my sample ifcfg-eth0 and ifcfg-lo files I hope they will be usefull. Reading a good book about what netmask, subnet broadcast are would make this section clearer.