Layer 1: media converters
Layer 1 is the Physical Layer. Media converters operating at Layer 1 only convert electrical signals and physical media without doing anything to data coming through the link.

These media converters only have two ports—one in, one out—and convert the incoming electrical signal from one cable type and then transmit it over another type—UTP to fiber, thick coax to Thin, and so on.

Layer 2: switches and media converters
Layer 2 is the Data-Link Layer. Devices operating at Layer 2 sort packets using physical network addresses, also known as MAC addresses. All network hardware is permanently assigned this number during its manufacture.

Both switches and media converters can be Layer 2 devices. Usually the only difference between a Layer 2 switch and a Layer 2 media converter is the number of ports—a device with two or three ports is called a media converter; four or more ports is called a switch. A media converter operating at Layer 2 may have more than two ports and may have ports operating at different speeds.

Devices operating at Layer 2 are very fast, but aren’t very smart because they don’t look at data packets closely. A Layer 2 media converter is considered to be fairly advanced for a media converter, but a Layer 2 switch is a basic switch.

Layer 3: switches
Layer 3 is the Network Layer. Layer 3 switches use network or IP addresses that identify locations on the network. Because they read packets more closely than Layer 2 switches do, they identify network locations as well as physical devices. A location can be a LAN workstation, an address in a computer’s memory, or even a different packet of data traveling through a network.

Switches operating at Layer 3 are smarter than Layer 2 devices and incorporate routing functions to actively calculate the best way to send a packet to its destination.

Network Router
A router is used to route data packets between two networks. It reads the information in each packet to tell where it is going. If it is destined for an immediate network it has access to, it will strip the outer packet, readdress the packet to the proper ethernet address, and transmit it on that network. If it is destined for another network and must be sent to another router, it will re-package the outer packet to be received by the next router and send it to the next router.