Direct Connection is common for game consoles to support two-player network gaming (e.g., Xbox System Link).
Optional Components - Connecting to the Internet requires that one computer possess two network adapters - one to support the Internet connection and one to support the second computer. Additionally, Internet connection sharing software must be installed to allow the second computer Internet access. If Internet connectivity is not necessary, these things can be omitted from this layout.
Limitations - Direct connection works only for a single pair of computers / devices. Additional devices cannot join such a network, although other pairs can be connected separately as shown above.