The Ethernet protocol requires that a signal sent out over the LAN reach every part of the network within a specified length of time. The 5-4-3 rule ensures this. Each repeater that a signal goes through adds a small amount of time to the process, so the rule is designed to minimize transmission times of the signals.
The 5-4-3 rule -- which was created when Ethernet, 10Base5, and 10Base2 were the only types of Ethernet network available -- only applies to shared-access Ethernet backbones. A switched Ethernet network should be exempt from the 5-4-3 rule because each switch has a buffer to temporarily store data and all nodes can access a switched Ethernet LAN simultaneously.
In networks, a section of a network that is bounded by bridges, routers or switches. Dividing an Ethernet into multiple segments is one of the most common ways of increasing available bandwidth on the LAN. If segmented correctly, most network traffic will remain within a single segment, enjoying the full 10 Mbps bandwidth. Hubs and switches are used to connect each segment to the rest of the LAN.
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