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It is using a router to answer ARP requests. This will be done when the originating host believes that a destination is local, when in fact is lies beyond router.

Proxy ARP (Address Resolution Protocol) is a technique by which a device on a given network answers the ARP queries for a network address that is not on that network. The ARP Proxy is aware of the location of the traffic's destination, and offers its own MAC address in reply, effectively saying, "send it to me, and I'll get it to where it needs to go." Serving as an ARP Proxy for another host effectively directs LAN traffic to the Proxy. The "captured" traffic is then typically routed by the Proxy to the intended destination via another interface

The main advantage of proxy ARP is that it can be added to a single router on a network and does not disturb the routing tables of the other routers on the network. 

HUB When Ethernet was originally designed it used a single fat coax called a backbone. Individual hosts were physically connected to the backbone. This created a party line. Each host has to listen for the backbone to be idle before it started talking. It is possible more then one host will start talking at the same time, in that case the messages collide making them unintelligible. This condition is detected each transmitter stops talking and waits a variable interval before attempting to talk again. The Ethernet network is called a collision domain, since all devices must wait until the line is clear, and may inadvertently interfere with one another.

When Ethernet was modified to run over Unshielded Twisted Pair (UTP) Category rated wiring the original coax backbone was shrunk within the hub, called a collapsed backbone. Functionally a hub operates exactly as the old coax backbone. The ports on the hub provide a point-to-point connection to the Ethernet interface in each computer. With a hub each node must wait for the network to be idle and detect collisions between multiple nodes.

SWITCH As Ethernet networks grew in speed and size the party line nature was recognized as a performance limitation. Switches eliminate the collision domain and work much like the telephone switching system.

When an Ethernet packet arrives at the switch the destination MAC address is examined and the packet is switched to the proper port. Each Ethernet interface has a Media Access Controller (MAC) 48-bit address assigned by the hardware vendor. The switch remembers which MAC addresses are connected to each port. If the Switch does not know which port to use it floods the packet to all ports. When it gets a response it updates its internal MAC address table.

This means Port A can talk to C at the same time F is taking to B. This greatly increases overall performance even though it does not change the speed of individual connections. Because the collision domain is eliminated connections are able to use full duplex, hosts can transmit and receive at the same time improving performance even more.

ROUTER A router is used to interconnect multiple networks. The Internet is literally Internetwork -- a network of networks. Internet router?s work on IP addresses to determine how best to interconnect the sender to the destination. Because router?s work at the IP layer different physicalnetworks can be interconnected, Ethernet, Token Ring, Sonet, even RS232 serial used for dialup can carry IP packets.

Routers intended for home use include Network Address Translation (NAT). This allows a single address assigned by the ISP to be shared by multiple hosts connected to the local network. 

When the computers on the network simply listen and receive the signal, they are referred to as passive because they don?t amplify the signal in any way.

Example for passive topology - linear bus. 

Dial up connection requires a username/password & a modem to connect to internet.The maximum speed will be of 56kbps only. In this either the phone or the internet will work at a time.

While in broadband connection (it need a modem & may need user/password).It is directly connected with RJ45 LAN card. Its speed ranges from 256kbps to several mbps. In this both phone line and internet can work together.

These are all different things in networking.
Hub:Where we connect all the the links for a networking connection.
Node:It can be identified as a one connection.
Host:is nothing than if you are going to send a request to the server the questioned system can be know as a host. 

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