To build a network, the easiest way is to start at the bottom of the OSl layer and work up. For an Ethernet network, first you need to have physical cables. In the past, Ethernet networks used cheap but inefficient hardware like coaxial cabling or hubs. The low cost was one of the main features that historically led to the dominance of Ethernet over alternatives like Token Ring and ARCnet.
The problem with coax cables and hubs is that they form a bus topology. This means each device on the network sees every piece of data. They all effectively share one wire, and have to take turns sending data. The way this is done without interfering is a system called CSMA / CD, which stands for Carrier Sense Multiple Access with Collision Detection. What this mouthful means is that each device listens on the wire for frames. If there are no frames for a short time, it tries to send one. If two frames are sent at the same time, they cause a collision, and the data becomes garbled. In this case, each machine involved in the collision waits a certain amount of time before attempting to send again, and hopefully everything ever works out.
There were some ways to improve things a bit, such as the use of bridges. A network bridge sets between two segments of a network, and determines when plackets one side need to cross over to the other, working on layer 2. It's step up from a repeater, which is just a layer 1 device that blindly broadcasts everything on one side to the other and vice versa. Bridges can reduce the amount of unnecessary traffic over a network, which improves efficiencies. However, they need to have some processing onboard to make decisions about the packages.
While this usually works, it's not always the most efficient way to do things. As the cost of electronics came down, coaxial Ethernet and simple hubs for UTP (Unshielded Twisted Pair) wave way to higher quality wiring and switches. While hubs looked like an improvement, since they make the network more resemblance a star topology, internally all they do is connect each wire together into the same solution as a bus system, just with more convenient connectors. The two other main topologies for networks are ring topology, which Token Ring uses, and mesh topology, where each machine has a dedicated connection to each other machine on the network. One can easily see how mesh could get prohibitively complex and expensive quickly. Ring systems, on the other hand, were popular for a while, but the ability of the entire network to fail with only one or two machines in the ring experiencing problems was big drawback. A switch is essentially a bank of bridges, one for each machine. The improvement that switches bring over hubs is dramatic. With the switch reading the layer 2 frames and only sending data to the specific ports that are involved, collisions became virtually nonexistent and bandwidth improvements drastically. This makes the Ethernet network into a true star topology network, where each machine connects to a central point. These days, hubs are actually extinct since switches have become so cheap to produce.