Win98 as router to another Win 98

On my LAN my systems runs on Win 98 i have given IP address 192.168.1.12 , Gateway as 192.168.1.2 ( Which is a gateway server) & i have also entered DNS servers in TCP/IP properties. now on my second system which is also running on Win 98 i have entered the ip address , DNS Servers but i have entered IP address of my first Win 98 machine i.e 192.168.1.12 as gateway. am able to browse from my second machine using the IP address of the first WIn 98 machine.

1)How is this possible i mean how my first win 98 is forwarding the request from first win 98 machine ??

2) what is the function of ROUTE command ?