A switch, in the context of networking is a high-speed device that receives incoming data packets and redirects them to their destination on a local area network (LAN). A LAN switch operates at the data link layer (Layer 2) or the network layer of the OSI Model and, as such it can support all types of packet protocols.
Essentially, switches are the traffic cops of a simple local area network.
A switch in an Ethernet-based LAN reads incoming TCP/IP data packets/frames containing destination information as they pass into one or more input ports. The destination information in the packets is used to determine which output ports will be used to send the data on to its intended destination.
Switches are similar to hubs, only smarter. A hub simply connects all the nodes on the network -- communication is essentially in a haphazard manner with any device trying to communicate at any time, resulting in many collisions. A switch, on the other hand, creates an electronic tunnel between source and destination ports for a split second that no other traffic can enter. This results in communication without collisions.
Switches are similar to routers as well, but a router has the additional ability to forward packets between different networks, whereas a switch is limited to node-to-node communication on the same network.