Blimey. Loads of questions! I'll have a go at answering some of them quickly before I go out ...
How does the server know if someone connects?
You check NET PLAYER CREATED() to get new player ID numbers.
if player ID 2 leaves...is player ID 3 still player id 3?
Yes, although a new connection might re-use player ID 2.
Client/Server is exactly what it says it is. It just puts one machine in charge. All machines will communicate to others via this machine instead of directly.
I am trying to make a chat server/client ...
Check out the example code in the Codebase that I posted a few days ago.
if your going to host a game....what should you put for an ip?
Your own. Check out the IP address code that I posted in Codebase a few weeks ago.
Right. I'm off out now - Seeya later