What is the real MLM business? Can you recruit or advertise products on the Net?

Overt recruiting ads ("Entrepreneurs needed for international marketing company!!" and the like) or product ads ("Improve your life with XYZ product!") are strongly discouraged, and often are flamed into oblivion. Do yourself a favor and don't do it.
Why? Consider what would happen if the Net community allowed it. There are already hundreds, maybe thousands, of MLM people on the net. If each of them posted once, and picked up one or two recruits, and each of them posted once, and picked up one or two recruits, and... You get the picture. The Net would soon be awash in MLM recruiting ads. (Note: the above was written in late 1993. Guess what? Since then, thousands of people have ignored the rules of "netiquette" and blasted their ads all over the place. And alt.business.multi-level , misc.entrepreneurs, and many other groups that once carried lively and useful discussions have indeed become awash in MLM recruiting ads. They are now absolutely unusable for any form of productive discussion. THAT'S why ads are discouraged.)
Similarly, people often post recruiting ads to inappropriate places like misc.entrepreneur. They say "Other business people post here looking for partners, why can't I?" The difference is, looking for partners or investors in "traditional" businesses is a very infrequent event, and no one minds the occasional post. But looking for new "partners" (distributors) is a CONSTANT activity for any active MLMer, and most folks don't want to read constant MLM recruiting posts. Do us all a favor and DON'T DO IT.
Besides, the majority of folks in misc.entrepreneurs.moderated have EXPLICITLY stated that they DO NOT want MLM ads OR discussions there. The moderator accepts limited MLM discussions, but ads are NEVER allowed. But alt.business.multi -level.moderated is a more appropriate forum for MLM discussions. Even if you feel MLM is an entrepreneurial activity (and most would agree), misc.entrepreneurs.moderated is not the appropriate place to discuss MLM. "Ren & Stimpy" is a cartoon, and so is "Tiny Toons," but the folks in alt.tv.tiny-toon would NOT appreciate it if you posted constant R&S comments there. Your comments would belong in alt.tv.ren-n-stimpy, where the readers would be much more interested and receptive. Please treat the folks in misc.entrepreneurs.moderated with the same courtesy.
Remember that the Internet is **NOT** your private free classified ad section. There ARE places that explicitly allow ads, mostly on CompuServe and AOL, and ads are fine there. But unless a newsgroup EXPLICITLY says ads are OK, you SHOULD NOT post ads there.
So, can you recruit over the net? Absolutely, as long as it is done tastefully and discreetly. If you see someone post something about a problem that your product could help, there's nothing wrong with telling him about your product - preferably via email, not in news. Just make sure to be up-front that you market the product, and he could get it from you if he wanted to. You can offer to tell him more if he's interested, and things can go from there.
Sometimes something you post will spark someone's curiosity, and they might contact you to find out more. Postings can be especially effective if you use a 4-to-6-line "sig" containing a brief mention of your business. (Short "sig" ads ARE acceptable under Usenet rules, as long as your post isn't a one-liner excuse to wave your sig around.) If this leads to them joining you in your business, that's great! As long as your post wasn't a blatant ad, no one is likely to complain.
Just as you wouldn't stand up in your classroom, place of work, church, or whatever, and scream at the top of your lungs "I'M LOOKING FOR PEOPLE TO JOIN MY MLM!!!" - you shouldn't do it on the net. Remember that your posts go all around the world and are seen by thousands of people - many of whom are in other countries and couldn't enroll in your MLM even if they wanted to. But similarly, just as you might casually discuss your company with a co-worker or friend or whatever, it's OK to casually discuss it, privately, via email, on the net - even if it results in enrolling your friend.
By the way, "discussing it privately by email" DOES NOT mean it's OK to mailbomb hundreds of people with your recruiting message! Junk mail is junk mail, whether it's delivered via 3rd class USPS or via the Internet. Junk mailers on the Internet are frowned on even more than "paper" mailers, and often lose their net access for bugging so many people. Don't do it.
Bottom line: as long as you don't inflict your recruiting or advertising on the entire net, or any particular newsgroup, or any particular mailing list, you're probably fine.