Q: The Intel Wi-Fi LAN card in my company's Windows 7 laptops has the option to select between auto 20/40MHz and 20MHz only. What does the auto 20/40MHz setting mean?
Larger the bandwidth, higher the transmitted data rate
A: The newer 802.11n radio can use either a 20MHz or a 40MHz channel. Just like in wired communications, the larger the bandwidth, the higher the transmitted data rate. All else being equal, an 802.11n device transmitting on a 40MHz channel can transmit at more than twice the data rate of an 802.11n device transmitting on a 20MHz channel. Therefore, it's desirable to transmit using the 40MHz channel.
Conversely, if you're transmitting on a 40MHz channel, you'll cause more interference than if you're transmitting on a 20MHz channel. To minimize the impact of the interference, an 802.11n Access Point (AP) will do channel assessments. The AP will use a 40MHz channel if there's no notable noise on the channel but will automatically drop back to 20MHz if it detects notable noise. This automatic switching between 40MHz and 20MHz is called auto 20/40MHz.
Select 20MHz option when limited spectrum available
There might be situations in which you want the AP to always operate in a 20MHz channel. For example, if you were deploying multiple APs in the 2.4GHz frequency band, there isn't enough spectrum available to implement 40MHz channels. In this case, you would select the 20MHz option.