I can give u the lowdown on a router. What it does is take 1 address ***igned to you by your provider and "splits" it up for more than one computer. This essentially uses only one ip address, for 1 or more cpus. A residential gateway acts like a router, same thing essentially.

For basic home use, CrazyKillerMan has a decent definition for router (he actually defined NAT). A router connects multiple networks on different IP ranges/subnets. A regular router does not ***ign all the information that you are asking about (gateway, subnet mask, etc.). That function is actually done by a DHCP (Dynamic Host Configuration Protocol) server. For the "residential gateways" that you have been seeing, they are usually a router/hub(or switch)/DHCP server/NAT server (which is loosely referred to as a firewall) combo that does a decent job of all of the above for home use. I have a Linksys BEFSR41 for my cable access and an Eicon Diva LAN ISDN router for my ISDN access. Both of them do the same thing; allow you to connect multiple machines to the internet using the single IP address given by the ISP. A proxy is generally a software package that is installed on a machine (with 2 NICs most of the time) that allows for traffic on the LAN to go through the "Proxy Server" out to the internet which the server is already connected to. The "Proxy Server" acts as a mediator between the LAN and the Internet, deciding what goes in and out of the LAN. As far as switches go, they used to be more expensive (good ones still are) which is why they were not sold as often. In addition, monitoring traffic isn't as effective since the switch is "port aware" as to what IP is on which port, and will direct traffic directly to that port (most of the time ). I hope this answers most of your questions.
 
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Regards,
 
clutch

Thanks all for replying.