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I think you need to be a little more detailed in your answer For example: how does OpenWRT replace this method?
Yes, the eth0 is the connection from the RPi to the modem (ISP box). You should then see a new WiFi point to connect to, same as the one you named in the SSID field in the hostapd.conf file.This will allow the RPi to collect the data packets and pass then onto whatever is connected to the WiFi.
Mac !== MAC
VHF-UHF RF Sniffer
ATTiny USI I2C Introduction - A powerful, fast, and convenient communication interface for your ATTiny projects!
Repair dead AVR's - Attiny fusebit doctor (HVSP)