How does the AirPort Express 'talk' to another AirPort Express for streaming audio on the same network?

In brief, yes you can easily accomplish what you intend. The reason you are having difficulty finding a clear explanation is that the Express can be configured in many unique ways and everyone's needs are different.

A simple configuration is to designate one Express as your router, which connects directly to your cable or DSL modem. Connecting another Express in the manner you propose will create an additional wireless access point from which you can connect wirelessly, including AirPlay streaming to the first one as you describe.

There are other possible configurations. The optimum one depends on your particular installation, wireless environment, and how you want to use your devices.

I designed a home theater for myself, so I realize the challenges you can face, but networking AirPort base stations should be the least of them.

For documentation you can start with the following:

Wi-Fi base stations: Setting up and configuring a roaming network (802.11 a/b/g/n)

The screenshots show an older version of AirPort Utility and may not be very helpful, but the terminology is correct. You may find the next one more specifically applicable to a HT installation:

Wi-Fi base stations: How to set up and configure AirPort Express for AirPlay and iTunes

In the above, refer to the section titled Connecting to an existing Wi-Fi network as part of a roaming network.

In that section, the picture shows an AirPort Extreme and an AirPort Express. For your particular question, you can simply consider both those devices as AirPort Expresses. Their connections will be identical.

An AppleTV has only HDMI and optical audio outputs and does not convey an additional wireless access point, should that matter to you. The AirPort Express has optical as well as analog audio outputs, so if any AV equipment you use absolutely requires an analog signal you need the Express. Most newer equipment has assignable Toslink inputs. If it were up to me I'd prefer a receiver with no analog inputs at all, but no one makes one of those (yet).

The best alternative is to have an AVR that supports AirPlay directly. Denon and Marantz are two that come to mind. I like Marantz, but they make it difficult to buy their products, and I have yet to find a mid to high end AVR with a user interface that isn't abysmal. Marantz is probably the best there is, but it's a long way from what it ought to be. It would be nice if someone were to make a full-featured, totally digital AVR with a well thought out UI, but there just isn't one on the market at any price.

Are you listening Apple

🙂