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Router - A router is a system which allows two separate networks to talk to one another, but blocks any traffic which does not need to pass through it. It is like a translator for two segregated groups of people who wish to converse, but speak two different languages. The translator only comes into use when foreign-language-speaking people wish to converse. Otherwise the different groups can freely converse amongst themselves.
A common use for a router today is as a way to connect a private Local Area Network (LAN) to the Internet. The Internet Service Provider (ISP) has its own network of computers, all of which are connected to the Internet. And if you wish to connect a LAN to that network, and thereby access the Internet, you use a router to make that connection. It "routes" any transmissions on the ISP's network meant for your computers onto your LAN. Other transmissions are blocked from reaching your LAN. The same is true with traffic originating on your LAN. Only transmissions meant to reach the Internet pass through the router and leave the LAN, headed for the Internet. Consumer-level routers are most commonly found as part of an integrated device that is also a hub or a switch.
Gateway - This is a term which is used frequently and has several meanings. A gateway is distinguished more by WHERE it is rather than WHAT is. Gateways are simply common points of access that many other client computers use to reach remote services. A server computer can be an Internet gateway because many clients on a LAN access the Internet through that server. This server is then also very likely to function as a firewall, proxy server, or router, if these services are not designed into the network elsewhere.
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