ELI5: When Data is sent over a network, it is not sent “whole”; it is broken up into small chunks to transmit and each chunk has a “conversation” back and forth between the sender and receiver. The further your data has to travel, the longer it takes for this conversation to take place for each piece of data (this is called latency). This lowers the total amount of data you can transmit over a period of time – ie MB/second because each data chunk has to wait.
Therefore, even though your infrastructure (modem, hub, wiring etc.) might be able to support 1Gb/sec “Bandwidth” , as your latency increases, the “travel time” for communications (data) to go from (or back to) your computer to (or from) the destination (web site, ftp site etc.) increases and your total real life effective Mb/sec throughput decreases.
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