There are lots of types of multiplexing. The most simple is space division where the signal carriers are literally held separate by some kind of insulator (like CAT5 or telephone wire.) Time division multiplexing involves using a timer on either end to determine which signal the carrier is carrying. Core-division multiplexing (CDM) uses a code followed by data to specify which signal is being carried. Finally, frequency-division multiplexing (or in the fiber optic world, wavelength division multiplexing) involves sending signals over several distinct frequency ranges over a carrier.
The easiest way to think about this is in terms of light. At one end of a fiber optic cable you have a lens that takes many colors of light and combines them into high energy white light. That white light is sent to a prism at the other end of the fiber which splits the white light back up into it's constituent colors. If the red light at the beginning of the fiber blinks in a certain pattern, the red light at the far end will also blink without interfering with the other colors (wavelengths.)
|Image from Wikipedia|
WDM (wave-division multiplexing) is further broken down into two flavors, CWDM or Coarse WDM and DWDM or Dense WDM. In Coarse WDM fewer signals are combined onto the fiber and they are spaced farther apart. In DWDM more signals can be combined resulting in increased hardware and system design complexity and higher costs. Depending on the system needs CWDM and DWDM are both viable options.
I hope that helps explain why multiplexing is such an important part of fiber optic communications!
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