Have you ever thought about if a nerd kid get access to your open wifi what all things he can do? Forget about porn...I mean these days even downloading torrents are pretty much illegal! The better option is to keep a MAC filtering and even though if you apply MAC filtering a good hacker can easily clone MAC address and access you Wifi.Still MAC filtering is a good option and also provide static IP to the users.
Now what kind of monitoring we are talking about here? You just need to keep track of the sites they are accessing or you want complete sniffing through the wifi? If you need deep packet inspection the Wireshark is your ally.
Theoretically speaking,Yes you can restrict your Wifi Signal range but it can't be done with stock firmware of a router.Atleast my router wont allow me to.
Now coming to Signal boosting part,You should choose a better wireless channel without much interference.Plenty of tools and mobile apps are available to choose a better wireless channel.You can use one of those apps or DDRT itself provide mechanism to choose the optimal frequency for you.
You’ll want to transmit as powerfully as your router allows, you might end up frying its motherboard that way. Instead, setting its transmit (Tx) power to 71 mW will give it a slight kick without any burnout.
This procedure is more or less similar like overclocking your Processor or GPU.Ideally the this will be under clocked but you can edit it the transmission power with DDRT.You will have to carry a mobile/laptop with wifi and manually check the range too.
Now i really want to help you with the deep sniffing part to monitor the websites and unencrypted communications your neighbors use...But i personally think that is kinda pervert.Still if you really wanna do that google can help you out with that too.
High level security part,Use any encryption with AES algorithm support.It will take ages to any hacker to crack it with brute force unless he/she have a supercomputer with teraflops of power at his disposal.
I'm not sure whether your model will support DDRT you can check it in their website.
Cain & Abel provides good information , if someone wants to sniff into the network.
Although , I am not sure someone beginning with this stuff can start with WireShark right away. Isn't that a bit complex for beginners ??
Thanks. I was not aware about that thing. So one can limit the signal to predefined area in meters or what?
Not all routers allow it with Stock FW , but like the guy above me said it's possible but its not for beginners . But yeah , Possible.
While you can change band to a , b , g , n . As different bands have different range. For e.g. , b/g has twice the range of a , whereas n has twice that of b/g. It's like you got certain choices.
It's possible to manipulate the range using various techniques but then it's not available on stock , probably due to legal regulations .