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LinuxSecurity.com: Packet Sniffing Overview

“A packet sniffer is a program which monitors network traffic
which passes through your computer. A packet sniffer which runs on
your PC connected to the internet using a modem, can tell you your
current IP address as well as the IP addresses of the web servers
whose sites you are visiting.

“You can watch all the un-encrypted data that travels from your
computer, onto the internet. This includes passwords and other
sensitive data that is not secured by encryption. Put a packet
sniffer on a router on the internet, and you can watch all the
network traffic that passes through that router. This includes
absolutely anyone whose data happens to pass through that
router…”

Complete
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