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(lemmy.dbzer0.com)
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It used wifi. Can't remember if it also had IR communication, like the GBC. It's been ages since I had a DS, but I'm pretty sure that there was another handheld other than the GameBoy Color that had the IR stuff. Nobody used it though, because it fuckin sucked.
The DS did have an IR sensor but (I'm pretty sure, don't quote me too hard here) a majority of the local communication was using either wifi or a proprietary wireless connection using the wifi antenna/chip.
I specifically remember Pokemon Black/White having an IR quick-trade option where you had to put 2 DS's back-to-back and being really confused about it because it seemed useless since it took so long to actually work.