The laptops connect to each other over their own mesh network. This means several people can collaborate on a report, drawing, or map at the same time. An internet connection at one part of the network is extended out to all users. As humanitarian work and disaster relief goes high-tech, this type of network has a lot of applications beyond the classroom.
Here is a video from OLPC explaining it -- the first 2 minutes covers it and then they go on about hardware specs. One of the engineers uses the figure "300 feet" but the laptop's wireless can reach up to a kilometer with the ears up.
One of the reasons I posted this video is for an upcoming mapping project in Bangladesh.