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Good point--we will be adding more info in the manual about networking. We only cover some edge cases such as setting up a copilot machine and networking multiple computers as external visuals.
To use the multiplayer feature when all machines are on one network (and running the same version of X-Plane), go to Settings > network and expand the multiplayer section. Click the blue button to add another player. You can enter an IP address by hand, or if they already have X-Plane running, you'll most likely see them named in the drop down list. You should not need to change the port number, nor the machine's role. You can add up to 19 machines this way.
When you go back to your flight, you should see the other aircraft on screen and in the map. Note that having different scenery installed will affect this as well. If your "opponent" doesn't have scenery and you do, they will be at a different altitude (0 ft MSL).
The Netflight plugin was recommended to me, but is X-Plane 10 only I believe.
Modern multiplayer is a feature we have on our (very) long term wish list but just isn't available on X-Plane yet. Basically all we have is local networking for people with multiple computers.
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