The drives would be attached directly to the pogoplug which would be connected to your router. You then access the drives by running the pogoplug application or through the web interface. The application allows you to access the drive pretty much just like you would if they were physically connected to your computer.

I know that some back up software seems to work well and others do not. There has been quite a bit of discussion on the forums about back ups. You might want to do a search. Also, pogoplug has a built in feature called Active Copy that will back up drives for you automatically. As for your router, I'm not sure but it does seem to work with most routers.