A couple of years back, the computers were connected to each other by what is known as a bus network where all the computers were connected using a single coaxial networking cable hooked to each computer using a T connector.
But this kind of arrangement caused a lot of problems and a break in the cable,loose connectors or a cable short was enough to bring down the entire network. And troubleshooting these problems were a big headache because it was difficult to pin-point the error. To circumvent this problem, another network design was embraced which is the star network where the computers are connected to each other via a common physical device called a hub.
Now a days, small ethernet networks consists of a hub. And all packets which are destined to other computers has to travel via the hub. The duty of the hub is simply to recieve packets through one port and broadcast it through all the other ports. So the hub operated under a single collision domain and a single broadcast domain. For small networks consisting of less than 10 machines, the hub is ideal but its performance rapidly degrades when the network is scaled to include more machines.
A switch can be considered to be (in layman speak) an intelligent form of a hub in that there is a software which resides inside the switch which learns and stores the Mac addresses of all the machines connected to it. And once the learning phase is over, a switch is able to route the packets destined for a particular computer within the same network intelligently thus bringing down the broadcast noise and eliminating packet loss due to collisions. So switches are said to operate under the same broadcast domain but different collision domains. Another difference between a hub and a switch is that all the nodes (devices) that connect to a hub share the bandwidth where as a device that connect to a switch port has the full bandwidth alone. Switches usually operate in the layer 2 or data link layer of the OSI reference model where as hubs operate in the layer 1 or physical layer of the OSI model. Using some switches, it is possible to segregate a network into multiple broadcast domains by configuring the switches as VLANs (Virtual LANs).
There is another device called a router which operates in the layer 3 of the OSI reference model which is termed the network layer. This device is used to route packets which are destined for computers residing in remote networks. Routers operate under different collision and broadcast domains.
Cisco is the world leader in the switches and router market though there are other players like Juniper networks and Dlink which also manufacture routers, switches and hubs. Cisco is also famous for its certification exams which qualify a person as a CCNA/CCNP/CCIE which has great value in getting employed in the networking field. I came across this interesting article which explains the inner working of a LAN switch which makes an informative read.
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