4 System Hook-up
I recently just got into this method and it is the best idea for gaming to date, only besides LIVE. All of this surrounds a little box called a Network Hub. It has either 2, 4, 5, 8 16, 32, or a monster 50 ethernet jacks in the back. This allows you too hook up as many xboxs to this network using the correct cables and video games.
One good reason why this is the best route to take is that it's very reliable to use and has potential in the future. *think halo 2*. There are many kinds of networks out there but the best I've seen (and bought) is the SysLink hub. These things are everywhere and can sell for reasonable prices depending on how many ethernet jacks on in it. I bought it (with the help of Nathaniel Reeder) at my local radioshack for 30 smackers. Not to bad when it includes 5 jacks of play.
It's also a switch which is the best cause it free's up memory to every jack of use so that the bandwidth is steady and stable for each xbox. A hub would not do this but it has a dedicated bandwidth for every jack thus making realiability an issue. You can still use a hub but it's not the best money can buy. Another thing you'll need is cables. Instead of using crossover cables for 2 systems, you won't be transferring data back and forth between two xboxs. So you'll need a patch cable. A regular CAT5e cable will work only so make sure that it's a CAT5e and patch all in one.
Once done, hook up each xbox with the cable (read above in 2 system link if not sure) in ethernet jack then the other end in the network hub. Do this to as many xbox's you want to link up and then start the games! It's that easy