A wireless router allows computers and other devices to join a wireless network, and usually also to communicate the internet.
Many people have wireless routers in the form of an ADSL modem combined with a wireless router. Ubuntu works very well with these devices, using NetworkManager, or other built-in wireless and networking tools. It should require very little configuration.
Ubuntu as a wireless router
Advanced users can configure their Ubuntu computer to act as a wireless router, if they have a wireless card and at least one other network interface. A detailed description of this is in Router.
Not all wireless cards are capable of acting as a base station. The current compatibility of various cards and chipsets can be seen here: