Can anyone explain the "wake for wifi network access" setting in energy preferences for me? I do not understand it.
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.
Unless you have a Apple-branded router or Time Capsule or a specially configured PC or Mac to act as the Bonjour Sleep Proxy Server, you should disable this, and save the energy. Even if you do have an Apple Router or Time Capsule, unless you are sharing music etc. you should turn it off and save the energy.
As for leaving this on for the "Find My Mac" feature to work better, think about it... if the thief of your macbook has an AirPort router, you'll still need to wait for the thief to turn the Mac on and enter the wifi key for his network for the Mac to be registered with mDNS for it to report itself. Since they will need to turn the Mac on to enter the Wi-Fi password, the Mac is already going to be turned on. Before it has the Wi-Fi key, no amount of Bonjour sleep proxy will wake your Mac.
Here is a quote from MacRumors.com: "...the Bonjour Sleep Proxy feature needed for the advanced functionalities of broadcasting information about the sleeping machine requires the use of an Apple AirPort or Time Capsule base station running firmware 7.4.2 or later."
This is all unfortunate, because this technology could save millions of tons of carbon a year, but the open source code Apple wrote for the server side is for BSD unix, and is difficult to port to Linux, so DD-WRT etc. have not implemented it.
Yes, it can help save energy (if you need that service), But if you don't need - It will increase electricity consumption.