XBees support two modes of operation: API and AT. In API mode, you communicate with the radio by sending and receiving packets. In AT (transparent) mode, the XBee radio simply relays serial data to the receiving XBee, as identified by the DH+DL address.
This software is designed solely for API mode. API mode is enabled by setting the AP parameter (Series 1), or uploading API firmware (Series 2). This software requires the AP mode set to 2 (escape bytes), as this setting offers the best reliability.
Here's a brief overview of the main advantages of API Mode vs. AT (Transparent Mode):
API (Packet) Mode
AT (Transparent) Mode
Series 1 radios support both AT and API modes with a single firmware version, allowing you switch between the modes with X-CTU. However, Series 2 requires a specific firmware for API mode. As of now there are two firmware versions for Series 2 API mode: ZNet and ZB Pro. ZNet is recommended as it is the easiest to work with.