Although hubs and switches look very similar and are connected to the network in much the same way, there is a significant difference in the way they function.
An Ethernet hub is the basic building block of a twisted-pair (10BASE-T or 100BASE-TX) Ethernet network. Hubs do little more than act as a physical connection. They link PCs and peripherals and enable them to communicate over a network. All data coming into the hub travels to all stations connected to the hub. Because a hub doesn’t use management or addressing, it simply divides the 10- or 100-Mbps bandwidth among users. If two stations are transferring high volumes of data between them, the network performance of all stations on that hub will suffer. Hubs are good choices for small- or home-office networks, particularly if bandwidth concerns are minimal.
An Ethernet switch, on the other hand, provides a central connection in an Ethernet network in which each connected device has its own dedicated link with full bandwidth. Switches divide LAN data into smaller, easier-to-manage segments and send data only to the PCs it needs to reach. They allot a full 10 or 100 Mbps to each user with addressing and management features. As a result, every port on the switch represents a dedicated 10- or 100-Mbps pathway. Because users connected to a switch do not have to share bandwidth, a switch offers relief from the network congestion a shared hub can cause.