Most people think of Internet tethering as something they have running on another device such as an iPhone to provide Wi-Fi to their iPads. Developers checking out the latest iOS 4.2 beta have found that Apple has now included the feature on iPads, allowing the iPad to share an Internet connection with other devices.
The discovery was made on iPads outside of the United States, with screenshots posted from two different wireless carriers in Europe; one in the UK and the other in Sweden. It's not clear if Apple plans to launch the feature in the final public release of iOS 4.2 coming to the iPad in November.
Under Settings -> Cellular Data -> Internet Tethering there are individual options for APN, Username and Password. These settings are completely separate from the normally seen Cellular Data authentication options. Some reports have speculated that Apple might only allow tethering via USB cable as opposed to Wi-Fi tethering.
Several jailbreak solutions exist to enable tethering, however this process could violate the service provider agreement (not to mention Apple considers jailbreaking a violation of your iPad warranty). Regardless, tethering can be a useful feature for sharing an Internet connection with multiple devices without paying for individual data plans or extra hardware.
It remains to be seen whether or not exclusive US carrier AT&T will allow Apple to implement the tethering feature on iPads using their 3G cellular data network. The company only recently made it possible for iPhones to share their Internet connection with the launch of new limited, tiered data plans and an additional monthly tethering charge.