WiFi systems use two primary radio transmission techniques.
802.11b (<=11 Mbps) − The 802.11b radio link uses a direct sequence spread spectrum technique called complementary coded keying (CCK). The bit stream is processed with a special coding and then modulated using Quadrature Phase Shift Keying (QPSK).
802.11a and g (<=54 Mbps) − The 802.11a and g systems use 64-channel orthogonal frequency division multiplexing (OFDM). In an OFDM modulation system, the available radio band is divided into a number of sub-channels and some of the bits are sent on each. The transmitter encodes the bit streams on the 64 subcarriers using Binary Phase Shift Keying (BPSK), Quadrature Phase Shift Keying (QPSK), or one of two levels of Quadrature Amplitude Modulation (16, or 64-QAM). Some of the transmitted information is redundant, so the receiver does not have to receive all of the sub-carriers to reconstruct the information.
The original 802.11 specifications also included an option for frequency hopping spread spectrum (FHSS), but that has largely been abandoned.
WiFi uses adaptive modulation and varying levels of forward error correction to optimize transmission rate and error performance.
As a radio signal loses power or encounters interference, the error rate will increase. Adaptive modulation means that the transmitter will automatically shift to a more robust, though less efficient, modulation technique in those adverse conditions.