csma/cd

This answer is directly copied from Webopedia: Short for Carrier Sense Multiple Access / Collision Detection, a set of rules determining how network devices respond when two devices attempt to use a data channel simultaneously (called a collision).Standard Ethernet networks use CSMA/CD. This standard enables devices to detect a collision. After detecting a collision, a device waits a random delay time and then attempts to re-transmit the message. If the device detects a collision again, it waits twice as long to try to re-transmit the message. This is known as exponential back off.

This was found at: http://webopedia.internet.com/TERM/C/CSMA_CD.html

Another useful site is at:
http://www.cs.bsu.edu/homepages/peb/cs637/ethernet/concepts.htm

or, to put it in a simpler ( layman's terms )
form, an ethernet network is nothing more than the new fangled version of a telephone party line. Everybody on the party line can talk, anytime they want to. If one person is talking, and one is listening, everything is fine. If you pick up the phone, and hear talking, you put it down, wait a couple of milliseconds, pick it up again, and if you don't hear anything, you speak. Your neighbor does the same thing, and he waits a couple of random milliseconds to pick up and talk.

Now, if you put a switch in the system, it
starts to act like a telephone operator/traffic cop. You pick up the phone, and unless someone is talking "just to you", you don't hear anything, so you talk. Yet the line is still busy. The switch simply uses other lines to route your call to the person you want to talk to, or holds it until the line is free.

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