Wow this thread opened my eyes more than I'd like. I hope none of my neighbours are smart enough to hack into my router. Some nice tips on making passwords tougher to crack which I'll try and put to use.
Precisely. Simple fact, if you have the CPU power, you can brute force well established algorithms. The problem is that some of the more complex algorithms in the 128 and 256 bit range are ridiculous and could take years and years for even the most powerful of computers to crack.
What crackers do is use dictionary files of the most common passphrases and words that are used for passwords and go through a "trial and error" test on each one. If you pick common words, they can do it fairly easily. If you pick uncommon words, but use a short password, they can brute force it systematically pretty easily. The moment you use a long and complex password based on no real pattern, the number of permutations that a brute force algorithm would need to run through to crack it could take centuries. Literally.
As for information passed over the air, ie. networks wired or wireless, unless it is encrypted it can be read in it's raw format. So ensure that SSL is used for logins when on public networks. If you are wired, on your secure home network with only you and your family etc, you'll be fine...unless your brother or someone is trying to sneak your passwords for fun.
Over the air on a public network, even if it has a password, is still visible by anyone on that network. Open wifi is even worse.
Moral of the story. Make sure sites use https (SSL through self signed or commercial certs) when passing sensitive information, use SSH2 when doing server to server stuff. Use FTP over SSH or FTPES with a cert and keep an eye out for news on security loopholes for the "secure" services you do use. SSL means jack squat if the server is passing session information back and forth without encryption. I could just snag that session and use it to masquerade as you on facebook without ever knowing your password to do it.
Aside from that, not much more you can do.