This is a new feature which came with iOS 4.3. First make sure you got this version or newer. Enabling the feature isn't that hard actually, and it enables you to share your internet connection on a wireless connection (wifi) so others can use your phones internet connection.
Just go to your phones home screen, go to settings, and then select "Personal Hotspot". Tap "Wi-Fi password" and set a good password, next tap the "Personal Hotspot" switch to enable it, and you are done.
Now there will appear a new Wireless Network which you can connect to on other devices and you got an internet connection.
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