Hubs
You can easily just plug two computers together with just two NICs, but in terms of gaming or networks, that’s about as minimal as you can get. The result is basically just two players, but when you want to hold a LAN of maybe 10 people, that’s obviously not going to cut it. So then comes in the hub. A hub is essentially a set of ports that has takes input in one port and outputs it to all the others. A hub will not protect you from viruses, nor will it allow very large networks.
Any packet entering any port is broadcast out on every port and thus hubs do not manage any of the traffic that comes through their ports. Since every packet is constantly being sent out through every port, this results in packet collisions, which greatly impedes the smooth flow of traffic. (Wiki)
Figure 1 – Net Gear Hub. In particular this hub only operates on 10/100 Mbps, so that fancy new 1000Mbps NIC earlier will NOT function at full capacity. You would need to buy a similar speed HUB to achieve the speeds that the Linksys NIC can operate at.
Switches
A switch is one step up from a hub, and can actually direct traffic to help prevent collisions and data loss. At bare minimum a switch is most likely recommended in most networks to help prevent data loss. Switching using hardware is significantly faster than by using software, therefore taking some strain off of the server.
Routers
Routers do not form LAN's and in most cases other computers connected by a router can not see each other. Routers can sometimes contain hardware firewalls which are fantastic when connecting a large group of people to the internet. Unless you want to give people at your LAN internet access, it's generally recommended that you avoid using routers simply for the fact that you can not see other computers. Routers do not require a computer to act as server (the router is the server), while hubs and switches require the use of another PC to act as server.
Routers also have another distinction as being one thing that makes wireless access easier.