ok I understand how it works and what they do to make it happen but what I dont understand is do you need to crack the encryption(WPA WPA2 WEP etc.) to do it?

You need to be connected to the network to execute a MITM attack.

/\
ROUTER ---- YOU --- TARGET


If you are not connected, then you cannot send/receive packets to/from the router, so the attack would not work.


LEGEND:
/\ hat

You need to be connected to the network to execute a MITM attack.

/\
ROUTER ---- YOU --- TARGET


If you are not connected, then you cannot send/receive packets to/from the router, so the attack would not work.


LEGEND:
/\ hat

I don't know why, but that made me laugh hysterically. Thank you. I hope you have a nice day. :)

Optionaly you could also crack the router's login and change the dns server to run you run, then you'd have a permenant medium for mitms.