Bluetooth works using wave radio technology through the 2.4 to 2.485GHz transmission band. It's relatively low powered, giving it an impressively long battery life. A Bluetooth device contains a small computer chip, enabling the user to connect that to other products within a 'Personal Area Network' (PAN) of 50 metres.
Bluetooth can transfer files between a PC and a smartphone, or move it between two mobile phones without physically needing to attach them with wires.
No both devices need the Bluetooth chip. If only one has it then it won't work. You have to sync them together while on a pairing mode then they connect to the phones audio. Bluetooth headset vary se are capable of doing both answering a call. And playing mp4 or mp3. then some are only good for calling for hands free. I hope that helps