Co-op requires you to be within 10% of the level of each other to connect. The servers in the game will place you at random so getting on the same server can be more hassle then its worth.
You need a white soap stone, after you have this item you can place a sign on the ground anyone on that server will see the sign and can summon you, if you are in human form you can see other white signs.
Any progress made only goes to the host. And unless the the person coming in as a phantom has a healing spell they can only be healed when the host drinks a potion.
That is about all there is to the basics.