How does a relay server work?
 

How exactly does a relay server work? What is its purpose? Can anyone explain this to me in easy-to-understand terms?

a relay server is a shoutcast server that is set to take a stream and relay it..

this is configured in the dnas settings

; RelayPort and RelayServer specify that you want to be a relay server.
; Relay servers act as clients to another server, and rebroadcast.
; Set RelayPort to 0, RelayServer to empty, or just leave these commented
; out to disable relay mode.
; RelayPort=8000
; RelayServer=192.168.1.58

remove the ; to enable and enter the server address you wish to relay like so

; RelayPort and RelayServer specify that you want to be a relay server.
; Relay servers act as clients to another server, and rebroadcast.
; Set RelayPort to 0, RelayServer to empty, or just leave these commented
; out to disable relay mode.
RelayPort=8000
RelayServer=123.456.7.89

Does this mean that with a relay server, you can increase the max amount of listeners then?

the listener capacity depends on the bandwidth available to the server regardless of its source (relay or dsp)

so say I want to run the server from my PC and play the mp3s on my laptop how do I do this???

enter the (internal) ip address and port of the shoutcast server into the shoutcast dsp on the laptop.