A typical network consists of one or more hubs, switches and routers. They all do similar jobs, however hubs are cheaper because all traffic from one port is broadcast across all other ports. They are "dumb".
Switches are more intelligent (and thus more expensive) and will quickly "learn" which IP addresses are connected to which ports. When a message is initially broadcast across all ports for a given IP address, only one port will respond (if at all), and the switch will then associate that port with the IP address for all future messages, reducing congestion across all other ports. This is why whenever a new machine is introduced to the network (or an existing machine goes offline), there is often a "lag" on the network while the switches figure out the new topology.
A router is the same as a switch but it is also programmable; it is really a computer in its own right. Routers typically provide two or more network interfaces allowing two or more otherwise separate networks to be linked. The router acts as the gateway between those networks. Your home broadband router is a typical example, linking your home network (the local area network) to the internet (the wide area network). A side-effect of routers is that a machine outside the LAN cannot initiate communications with a local machine; the local machine must initiate all communications outwith the LAN. As far as the WAN is concerned, only the router is visible, but the router uses network address translation (NAT) to route legitimate communications to the correct local machine. All illegitimate communications are simply ignored. A router typically provides a hardware firewall which can be configured to limit the type of (legitimate) communications that may be permitted either to or from the local area network.
Switches, hubs and routers may be daisy-chained or arranged in a star configuration, or a combination of the two. Each switch is linked to one or more network access points and computers connect to the network via these access points.
Access points can also be made available using Wi-Fi, utilising Wi-Fi extenders or repeaters as necessary to increase the range.
Wired connections are typically achieved using CAT5 or CAT5e cabling (8-core, twisted-pair), however network switches are typically linked via CAT6 or, in some cases, fibre optic cabling.
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