In hub-based Ethernet segments, network devices compete for the medium, because devices must take turns when transmitting. The network segments that share the same bandwidth between devices are known as collision domains, because when two or more devices within that segment try to communicate at the same time, collisions may occur.

It is possible, however, to use other network devices (examples would include switches and routers) operating at the TCP/IP model network access layer and above to divide a network into segments and reduce the number of devices that compete for bandwidth. Each new segment results in a new collision domain. More bandwidth is available to the devices on a segment, and collisions in one collision domain do not interfere with the other segments. This is also known as microsegmentation.

As shown in the figure, each switch port connects to a single PC or server, and each switch port represents a separate collision domain.