IP Masquerading and Basic Networking

[roamingnomad]

I never really have had much networking experience, so bear with me. I have had a few questions about networking.

First, I've been using a cable connection to the Internet that has two PCs hooked up to the router. I plugged it in and it worked without much configuration, so I assumed it was okay. But now I find that Time Warner's RR service (and maybe others, I don't know) charge an extra fee each month for each extra IP address.

However, I thought that the router made it look like a single IP address, but I seem wrong, so my first question is exactly what does a router, switch or hub do, and what are the differences?

This leads to my second question. If they charge extra for an extra IP address, shouldn't IP masquerading not be allowed or something? or does it matter (does IP masquerading take away their reason for charging extra)?

[roamingnomad]

"IP Masquerade is a networking function in Linux similar to the one-to-many (1:Many) NAT (Network Address Translation) servers found in many commercial firewalls and network routers. For example, if a Linux host is connected to the Internet via PPP, Ethernet, etc., the IP Masquerade feature allows other "internal" computers connected to this Linux box (via PPP, Ethernet, etc.) to also reach the Internet as well. Linux IP Masquerading allows for this functionality even though these internal machines don't have an officially assigned IP address.

MASQ allows a set of machines to invisibly access the Internet via the MASQ gateway. To other machines on the Internet, the outgoing traffic will appear to be from the IP MASQ Linux server itself. In addition to the added functionality, IP Masquerade provides the foundation to create a HEAVILY secured networking environment. With a well built firewall, breaking the security of a well configured masquerading system and internal LAN should be considerably difficult to accomplish. "

I guess that means I wouldn't have to pay as these other machines don't even have an IP address?