Collision domains are the connected physical network segments where collisions can occur. Collisions cause the network to be inefficient. Every time a collision happens on a network, all transmission stops for a period of time. The length of this period of time without transmissions varies and is determined by a backoff algorithm for each network device. 

The types of devices that interconnect the media segments define collision domains. These devices have been classified as OSI Layer 1, 2 or 3 devices. Layer 1 devices do not break up collision domains, Layer 2 and Layer 3 devices do break up collision domains. Breaking up, or increasing the number of collision domains with Layer 2 and 3 devices is also known as segmentation. 

Layer 1 devices, such as repeaters and hubs, serve the primary function of extending the Ethernet cable segments. By extending the network more hosts can be added. However, every host that is added increases the amount of potential traffic on the network. Since Layer 1 devices pass on everything that is sent on the media, the more traffic that is transmitted within a collision domain, the greater the chances of collisions. The final result is diminished network performance, which will be even more pronounced if all the computers on that network are demanding large amounts of bandwidth. Simply put, Layer 1 devices extend collision domains, but the length of a LAN can also be overextended and cause other collision issues.

The four repeater rule in Ethernet states that no more than four repeaters or repeating hubs can be between any two computers on the network. To assure that a repeated 10BASE-T network will function properly, the round-trip delay calculation must be within certain limits otherwise all the workstations will not be able to hear all the collisions on the network. Repeater latency, propagation delay, and NIC latency all contribute to the four repeater rule. Exceeding the four repeater rule can lead to violating the maximum delay limit. When this delay limit is exceeded, the number of late collisions dramatically increases. A late collision is when a collision happens after the first 64 bytes of the frame are transmitted. The chipsets in NICs are not required to retransmit automatically when a late collision occurs. These late collision frames add delay that is referred to as consumption delay. As consumption delay and latency increase, network performance decreases.

The 5-4-3-2-1 rule requires that the following guidelines should not be exceeded:

• Five segments of network media
• Four repeaters or hubs
• Three host segments of the network
• Two link sections (no hosts)
• One large collision domain

 The 5-4-3-2-1 rule also provides guidelines to keep round-trip delay time in a shared network within acceptable limits.

Web Links Collision Domain http://www.transition-french.com/learning/ whitepapers/ downloads/ colldom_wp.pdf