Canon used to use infra-red to communicate with the flash. Most recent models now include radio. But let's break down the options:
Canon's E-TTL & E-TTL II flash system works by metering the shot at two different times before actually taking the shot. The camera uses it's evaluative metering to meter the scene and check for dark & bright points. It then causes the flash to fire a pre-flash at only 1/32nd power (you can actually program how much power it uses, but that's the default). WHILE the flash is firing, the camera is doing two things... (1) it's re-metering the whole scene again and it's looking for the difference in light levels. It's trying to detect areas that didn't seem to change in brightness much at all (probably a light in the scene), it's looking for areas where the light levels changed dramatically (probably reflections -- and the camera assumes these are reflections), and finally it's looking for areas in the scene where the light level changed an amount on par with what was to be expected based on the flash firing. (2) It's programmed to ignore areas that are probably light sources of their own (e.g. imagine shooting a photo of a room and there's a table lamp in the scene) and it's also programmed to ignore things that appear to be reflections. It's using the metered results at 1/32nd power to estimate how much true power should be required when it takes the photo. It can also use distance information reported by the lens to calculate how much flash power "should" be required to adequate light a subject at that focused distance based on what it knows about the guide number of the camera and current aperture.
THEN the shutter opens to take the shot and the flash fires again (this time using the power leveled determined by the pre-flash.)
This all happens so fast that if you didn't know the camera & flash were doing this, you probably wouldn't even realize that the flash fired twice.
If you use remote flashes and they are not capable of supporting the full TTL (either E-TTL or E-TTL II) implementation, then those flashes have to fire using a manually determined power level (you dial the power level on the flash). Now you need a way to trigger the remote firing.
A common, and extremely inexpensive method, is to use a "light slave". It's a small module that plugs in to the bottom of the flash. It looks for a pulse of light and when it notices the pulse, it triggers the flash. The "problem" with this is that if the camera is doing TTL and the remote is doing manual (which is the only thing it can do if it doesn't support TTL) then the slave will trigger your remote light to flash for the "pre-flash". This throws off the accuracy of the TTL (which got an unexpectedly high amount of light for a "pre-flash") and also starts the remote flash re-cycling (so now it can't flash for a second or two.) Meanwhile, the camera THEN goes to fire the "real" flash and take the shot and the remotes don't fire. The result is a horribly under-exposed shot. There are some remote "light slaves" that have a TTL mode. They don't actually do the TTL calculations... all they really do is ignore the pre-flash and wait for the 2nd burst of light before telling the remote flash to fire. The problem with this approach is that the camera "calculated" the amount of light needed for the second flash based on the information from the pre-flash (when the remotes didn't fire). Now the remotes fire for the second shot and the result is different than the camera predicted. Unless "every" flash can support TTL, then it's probably easier to put all units into "manual" mode -- now nothing unexpected happens.
You can fire a remote flash by physical hard wire (hardly anyone does this anymore, but it used to be normal.) It requires an adapter that fits into the hot-shoe socket of your camera. It may also require an adapter that fits on the foot of the flash.
Canon used infra-red to remotely control flashes and has recently switched to radio. For IR based flashes, the camera needs to have a built-in IR commander -or- you can optionally buy the speedlight commander module (slips into the flash shoe just like a flash... but it has no flash on it... just a big IR window on the front.) Some flash models (e.g. the 580EX II) have a commander built into the flash (one of the huge IR windows you see on the front of the flash is the IR commander... there's another one which is the focus-assist beam.) IR requires "line of sight". Technically IR will bounce off walls and other objects so in a closed room they'll still fire even if they technically can't "see" each other, but outdoors they wont work unless they can "see" each other. In bright situations they may not work even if they can "see" each other. RF gets around these limitations (unfortunately nothing is perfect... so while RF solves some problems, it creates a few problems of it's own.)
You can also use a variety of radio-based 3rd party triggers. PocketWizard, RadioPoppers, and many more. You typically need at least two units... one that goes on the camera, and one that goes on each of your flashes.
PocketWizard makes some models which support TTL. These are the more expensive PocketWizards and not everyone loves them. "manually" controlled flashes never do anything unexpected. But TTL controlled flashes do... they do strange things. They don't always fire when they're supposed to. They're more vulnerable to RF interference then manually fired radio units because manual units only have to send a very simple signal when it's time to fire. TTL units have to communicate LOTS of data back and forth and any RF interference can corrupt that data (and sometimes the RF interference source is the remote flash itself. Canon's 580EX & 580EX II speedlites are somewhat notorious for generate a huge RF surge when they fire and it screws up the reliability of the PocketWizard.
PocketWizard probably is the 800lb gorilla in the remote flash trigger space. You'll notice a lot of other products include PocketWizard support. For example... I own a Sekonic light meter that has PocketWizard support built-in. That way I can meter a subject while triggering the flashes to fire and the meter will report the ambient exposure, flash exposure, and flash contribution percent (which makes it VERY easy to decide how much power to dial-up or down on a manually controlled flash -- or just when to move the light a little nearer or farther.)
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