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Basically, a hub receives a packet on one port, and forwards it out all it's other ports. A switch learns what systems are connected to it (by MAC address), and forwards received packets to the system it's destined for.
The end result is that each system has it's own broadcast segment, and doesn't have to listen for ethernet "collisions".
A switch will also allow systems to communicate a full duplex, whereas a hub will only allow half duplex.
Full duplex: This is used in switches and routers where they are communicating directly with another device. They can transmit and receive at the same time. This results in a much higher throughput. A standard 100M connection, using full duplex, can push through 200M of data.
Half duplex: The devices cannot communicate as full. They can either send or receive, but not both. This results in a lower throughput. Realistically, about 30%. So, a 100M connection will reveal about 30M of throughput. With very few devices, that number goes up, but you'll never reach the possible 100.
Auto-detect just allows the switch to sense what mode the other end is capable of, and if they can both use full, they do. The best way to set this up is to set the switch at full, and the clients at auto.
HTH,
Chase

Good explanation, but I beleive that there are hubs that support full-dup.
For instance, http://infodeli.3com.com/infodeli/inotes/techtran/a6ce_5ea.htm

Hubs, by definition, don't support full-duplex operation. They can't. A hub is a shared medium, whereas a switch is switched medium.
There are some devices that say they support full-duplex operations, and they apparently do, to the client. The difference is the backplane does all the collision detection, and takes the load off of the clients. So, in effect, they're still shared media. The client will still get collision notifications, it just won't come from a remote station, it will come from the hub.
A switch will remove collisions from your network.
Chase

Nothing removes collisons. Networking devices can separate groups of computers into separate collision domains reducing collisions. This is done by true switches through creating VLANs. (Virtual LANs.)
Duplexing is a function done at the NIC card. If full duplexing is enabled, two addtional wires are used and since hubs are just "repeaters", they will repeat the information off the additional wires. Hubs which do not offer full deplexing are "dead" on those two wires. No big deal and no fabric needed to have those two wires live.
Most stuff sold in stores as "switches" are actually hubs which can auto detect between 10 and 100mbs. They claim this ability is "switching" from 10 and 100 mbs.
All networking equipment use MAC addresses. IP addresses are only through TCP/IP software on your machine. A true switch can learn IP addresses and associate them with the MAC address of the networking device it needs to send it to. This is also done through software.
By the way, you can full-duplex with a crossover cable using no devices between the NICs.

Everytime you step into the really esoteric areas of networking, you make mistakes. You should stick to what you know, and not guess about things you don't.
A virtual LAN is created by switches, yes, but not the way you seem to think they are. They don't just split up the collision domain. It also invloves the funtion of making it look like computers connected a long ways away (possibly through many switches) is sitting directly next door. The illusion is that everyone in your workgroup is directly connected to the same switch you are, when that's not necessarily the case.
Now, duplexing. Yes, you're partly right. Duplexing IS a function of the NIC (the C stands for Card) and the switch it connects to. But, it doesn't use any additional two wires for traffic or control. You may be thinking of 100T4, which uses 4 wires for transmit, and 4 wires for receive to acheive 100M over Cat3 cabling. Not many installations use this type of wiring, though, because Cat5 has been out for quite a while, and it followed Cat3 so quickly.
And again, you're correct about machines using MAC addresses. The TCP/IP stack determines whether or not the machine accepts the packet. A true switch, however, doesn't learn IP addresses of devices connected to it, only the MAC addresses. Some switches, on the other hand, MAY have the ability to learn IP's connected, but that's not a switch function - that's a routing function. Some very high-end switches can perform routing (like the Cisco Catalyst series with a routing card in it).
Chase

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