The way this works is it intercepts the DNS lookup (where something like "www.yahoo.com" is translated into a server IP address "209.131.36.158" to get the web page) and redirects adult content to a page telling you that it's protected. Theoretically, you could get around such a filter by using an external nslookup for each DNS request, but that is enough of a pain to make surfing grind to a halt (sometimes pages have 10 or more DNS lookups per page).
Installing the service is as easy as changing your DNS server settings on your router to the ip address webwithout.com provides. This effectively makes any router or WiFi access point into a filtering router. There is no software to install or anything to buy. Just set and forget. I'm glad to see that even the Internet Channel on my Wii is protected with this.
It doesn't protect anything but web surfing. Instant messaging, email, some peer-to-peer systems and other services use different systems to work, but since we are living in a more browser-centric world now, this should not be a problem.
This is OK if it is voluntary, but it is pretty easy to get around if you don’t like it.
Each computer that connects to the router gets an IP address on your NAT’d subnet plus a pair of DNS IPs to use through the DHCP process. However, if you don’t like the results, you can reconfigure your computer to use something else.
The computer I’m on right now uses the DNS servers of OpenDNS, 208.67.222.222 and 208.67.220.220, and if I plugged it into your router it would still use them.