From bungie.net FAQs: You're probably familiar with the traditional matchmaking model. You either host a game or you join someone else's. If you're hosting, you rule the day, controlling every aspect of the game, who's allowed in it, the map, etc. If you're joining you specify criteria for the type of game you'd like to play, things like map, number of players, game rules, etc. The game then returns a list of games most similar to these criteria, sorted by how similar they are, or sometimes by connection speed. You choose one of these games to join, hope that it hasn't filled up by the time you do, and if you're lucky grab a spot in a game with a good connection, and if you're even luckier with settings somewhat matching what you're looking for. If not you back up, choose another game, and try again. This model works. Sort of. Behind the scenes Halo 2's matchmaking works in a similar manner. You specify match criteria by choosing Optimatch, by choosing Quickmatch to quickly recall your last used criteria, or by changing your match settings once in a Pregame Lobby. You start the game from the lobby. Halo 2 then takes over, requesting a list of games that match your criteria from the Xbox Live servers, or sometimes deciding to create a game that fits your search criteria and advertising it to others. If you're not creating then Halo 2 evaluates the list of available games, determines the game with the best connection that best matches your match criteria, and tries to join it. If the join fails another game is chosen automatically and you again try to join it. Wash , rinse, repeat, all completely automated until a match is finally made. So yes, PARTIES are hosted with a person, but all matches are hosted by Xbox Live servers.