Residential gateway is a term that has been used broadly to identify any device that acts as a single point of access, to or from, a home or residential computer network. This is much like any other network gateway, or border device, with the exception that its functionality may vary significantly. The term has, therefore, been used on anything ranging from a simple modem to a more robust piece of equipment providing routing and security features for a home network.
A device used as a residential gateway is similar, in essence, to a border gateway device used for a larger organization such as a corporate network which controls how two networks interact with one another. Depending somewhat on its capabilities, it allows for the creation of what's referred to as an autonomous system (AS), or a network of computers that are separated from the Internet as a whole by this gateway device. The residential gateway has its own address that it advertises out into the world, while the computers and devices that make up the home network then have their own internal address structure. While the device can bring together a home's local area network (LAN) with the Internet as a whole, it is also sometimes used when joining the home LAN with a community's wide area network (WAN). The larger WAN then has its own gateway out to the greater Internet.
In it simplest form, the residential gateway is a modem, such as those used by an Internet service provider (ISP) to link with the provider's network of services. In this case, it is only capable of sending the network traffic from a personal computer out over a specific type of connection, such as a phone line, coaxial cable, radio frequencies, and so forth, by converting the data into a signal. This type of device doesn't allow for the creation of a home LAN, however, and so if multiple computers inside the residence need to access the modem, it'll require one computer setup to share its Internet connection, or a small switch or hub connected to the modem. The modem type of residential gateway also offers no protection or networking.
Other devices, however, are sometimes marketed separately and provide the other gateway services useful to home networking. Those with routing capabilities will be able to handle tasks such as establishing a LAN via an explicit Internet protocol (IP) addressing scheme and run dynamic host configuration protocol (DHCP) services to make networking easier. To further aid in networking, these residential gateways will provide network address translation (NAT), which allows for the modification of certain packets' addresses in order to route those packets entering the LAN via one address to a specific internal address. For security, some devices also offer packet-filtering firewall functionality that further secures the home network from malicious intent.