WIFI Geolocation - where does the location come from

[#1]

I started to use Google lattitude.  I can understand how the location is picked up from sat nav, and the mobile network.  What I don't understand is how my location is picked up from the wifi network.
I live where there is only one detectable wifi network, mine.  My mobile phone locates by position exactly (5 meters) from the wifi network.  My PC locates me as well in the same location using a webbrowser and google gears.
A search of the internet suggests there may be a database of  wifi networks and their location.  How was this created?
Has plusnet been selling off our wifi network identifications and our addresses, or has there been a survey of wifi networks and their location by someone driving through the area (Microsoft did this in America at one time)
Or did google join together my sat nav location from my mobile phone with whatever networks it could see at the same time on my phone.
I am really intrigued at this.  It does seem to have some privacy implications.

[#2]

I thought you could only use Latitude on a phone, and not on a computer.

[#3]

Nope, you can use latitude from a webbrowser.  There is an API in Google Gears which returns your location from any wifi network in range.  I have a iGoogle  gadget for my home page which shows my location and my friends.  Only works with google.com, not google.co.uk  (Seems that google.com is alot more advanced in many ways that google.co.uk, including direct gmail reply from your igoogle page)

[#4]

The next version of Apple's OS X is rumored to also have location services built in telling you where you are located which I guess uses the same technology.  I know some of the IP look-up websites can locate your (almost) precise location so I guess your external IP address has something to do with it.  Tried it from my home PN ADSL line and it was within about 5 miles of my true house location, but I have no idea how it works!!!