When several Bluetooth devices connect with each other, they form an ad hoc network. An ad hoc network is a decentralized network that does not rely on any pre-existing network infrastructure. Each node can forward data to other nodes in the network dynamically depending on network connectivity and routing algorithm.

Now, Bluetooth follows master-slave architecture. When two Bluetooth devices communicate with each other, one device acts as a master and the other one acts as a slave. Each Bluetooth master device can connect up to seven slave devices. When a Bluetooth device initiates a Bluetooth connection, the initiator acts as a master. But, later the device can switch roles upon agreement and act as a slave.

So, when a master Bluetooth device connects up to seven slave devices, they form an ad hoc network called a piconet. Initially, when two Bluetooth devices connect with each other, they form a piconet. Later, the piconet may grow up to eight Bluetooth devices.

As discussed, a master device can connect up to seven devices. But, it can address one slave device at a time. Usually, a master device selects which slave device to address at a particular time and after it addresses that device, it switches rapidly to another device in a round-robin way. This master-slave architecture helps a Bluetooth system to have no collisions.

If there are two or more overlapping piconets, then the overlapping piconets form a scatternet. Please note that a Bluetooth device can act as a master in one piconet and as a slave in another piconet.

Because of the limitations of Bluetooth and MAC addresses, there are very few actual implementations of scatternets. But, there are lots of ongoing research to develop efficient algorithms to form scatternets.