The 4 or 5 port devices you buy, that claim they are switches, are actually nothing of the sort, and don't offer anywhere near the performance of buying and installing a multi-port switch from a well known manufacturer. On this page some common network equipment is defined, explained. and compared.
HUB - Cheap, unintelligent, and uncomplicated. Every computer connected to a hub is constantly flooded by traffic meant for other users and computer. Picture being in a room full of people and yelling to one person across the room. Every other person heard what you said and has to make an effort to tune you out and focus on what they are saying. The more people in the room, the bigger the chaos as they all try to yell through each other constantly.
In addition, eavesdropping on a conversation is as easy as downloading a piece of software off the internet.
SWITCH - A much more efficient and intelligent version of a HUB. By paying attention to the traffic that comes across it, it can "learn" what port a particular device is plugged into, and then uses that information to send only the data meant for a particular machine to the port that machine is on.
Picture an environment where every employee has their own office, and the mail-room clerk stops at each person's office and drops off the packages meant for them directly on their desk.
The net result of using a switch over a hub is that the network traffic only goes where it needs to rather than to every port. On busy networks this alone can make the network significantly faster. The communication is also much more secure because the other devices on the switch have no access to the data being sent to another computer. Some of the more functional switches have many security features, can be administered remotely, and have many features you previously only got on a router.
ROUTER - This is the most sophisticated of the network devices. Routers are required to connect different networks together. Routers connect to your network to your ISP, connect LANs together, and provide critical security functionality. They allow the use of only one IP address to connect many different devices to the internet, and most home routers include firewall functionality that will keep some of the bad traffic away from ever hitting your machine.
Imagine wanting to send a letter to Bob in Australia. You may have no idea how to get there yourself, but the postal system takes care of it for you. You put your return address and the destination address on the envelope, drop it into the closest mailbox, and your mail gets there every time.