I'm not the expert but off the top of my head, there are three general classes of consumer network-interconnect equipment. Hubs operate in broadcast mode for all the packets that are processed. That is, when one computer sends data, it broadcasts the packet to every machine plugged into the hub. If it is not the intended machine the packet is rejected or discarded, which is why hubs indicate 'collisions'. Hubs are no longer of much use in network applications. Switches operate such that the sending machine knows the IP address and path of the receiving machine, and sends packets only to the destination machine. Routers are sophisticated machines that typically have a BIOS, OS, routing protocol and memory. They record and analyze data so that the quickest 'routes' between two points are constantly analyzed. One protocol, OSPF (open shortest point first) for example monitors many different routes of sending packets to a destination by regularly sending ICMP or TCP packets, and updates a preferred 'routing list' to use the path with the least latency and fewest hops.

Router->A router is the smartest and most complicated of the bunch. Routers come in all shapes and sizes from the small four-port broadband routers that are very popular right now to the large industrial strength devices that drive the internet itself. A simple way to think of a router is as a computer that can be programmed to understand, possibly manipulate, and route the data its being asked to handle. For example, broadband routers include the ability to "hide" computers behind a type of firewall which involves slightly modifying the packets of network traffic as they traverse the device. All routers include some kind of user interface for configuring how the router will treat traffic. The really large routers include the equivalent of a full-blown programming language to describe how they should operate as well as the ability to communicate with other routers to describe or determine the best way to get network traffic from point A to point B. A quick note on one other thing that you'll often see mentioned with these devices and that's network speed. Most devices now are capable of both 10mps (10 mega-bits, or million bits, per second) as well as 100mbs and will automatically detect the speed. If the device is labeled with only one speed then it will only be able to communicate with devices that also support that speed. 1000mbs or "gigabit" devices are starting to slowly become more common as well. Similarly many devices now also include 802.11b or 802.11g wireless transmitters that simply act like additional ports to the device. Hub->A hub is typically the least expensive, least intelligent, and least complicated of the three. Its job is very simple: anything that comes in one port is sent out to the others. That's it. Every computer connected to the hub "sees" everything that every other computer on the hub sees. The hub itself is blissfully ignorant of the data being transmitted. For years, simple hubs have been quick and easy ways to connect computers in small networks.