A network covering a small geographic area, like a home, office, or building. Current LANs are most likely to be based on Ethernet technology. For example, a library may have a wired or wireless LAN for users to interconnect local devices (e.g., printers and servers) and to connect to the internet. On a wired LAN, PCs in the library are typically connected by category 5 (Cat5) cable, running the IEEE 802.3 protocol through a system of interconnection devices and eventually connect to the internet. The cables to the servers are typically on Cat 5e enhanced cable, which will support IEEE 802.3 at 1 Gbit/s. A wireless LAN may exist using a different IEEE protocol, 802.11b or 802.11g. The staff computers (bright green in the figure) can get to the color printer, checkout records, and the academic network and the Internet. All user computers can get to the Internet and the card catalog. Each workgroup can get to its local printer. Note that the printers are not accessible from outside their workgroup.

All interconnected devices must understand the network layer (layer 3), because they are handling multiple subnets (the different colors). Those inside the library, which have only 10/100 Mbit/s Ethernet connections to the user device and a Gigabit Ethernet connection to the central router, could be called "layer 3 switches" because they only have Ethernet interfaces and must understand IP. It would be more correct to call them access routers, where the router at the top is a distribution router that connects to the Internet and academic networks' customer access routers.

The defining characteristics of LANs, in contrast to WANs (wide area networks), include their higher data transfer rates, smaller geographic range, and lack of a need for leased telecommunication lines. Current Ethernet or other IEEE 802.3 LAN technologies operate at speeds up to 10 Gbit/s. This is the data transfer rate. IEEE has projects investigating the standardization of 100 Gbit/s, and possibly 40 Gbit/s.