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Can anyone explain the "wake for wifi network access" setting in energy preferences for me? I do not understand it.

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Wake for wifi network access (aka Wake on Demand but with Wifi) allows your computer to be brought out of sleep mode when someone else on the network requests access to a service on your computer eg. File sharing.

From this Apple KB article

Wake on Demand helps you save energy and reduce costs while still ensuring full access to all your shared files and devices, even remotely across the Internet. Wake on Demand works by partnering with a service running on your AirPort Base Station or Time Capsule called Bonjour Sleep Proxy. When Wake on Demand is enabled, any Mac on your network running OS X will automatically register itself and its shared items with the Bonjour Sleep Proxy. When a request is made to access a shared item on a Mac running OS X, the Bonjour Sleep Proxy asks that Mac to wake and handle the request. Once that request is complete, the Mac will go back to sleep at its regularly-scheduled interval as set in the Computer Sleep section of the Energy Saver preferences pane.

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