Ok, so channels are what are used to transfer data in AE2. Any data-storing or data-using device needs a channel. (For instance Import/Export/Storage Buses, ME Drives or Chests, P2P Tunnels, etc.) Things like ME Controllers, Inscribers or Crystal Growth Accelerators, do not use channels. (The controller doesn't handle data itself, it's just a big router)
After this, there are two kinds of network, ad-hoc (without a controller), which can simply only handle 8 data devices, after which the network fails to function.
When you have a controller, all channels become routed, and always goes between a device and the controller taking the shortest route. This also allows you to make use of the dense cable, which can handle 32 channels, rather than 8 for every other cable.
Attempting to overload the cables (i.e. using 9 devices on one Smart Cable line, leading to a Controller) the furthest Device will not activate, claiming to be Missing a channel.
I hope this helps.
EDIT: Also could check
here