Gateways happen to work on all seven OSI layers(The OSI, which means Open System Interconnection, is a network model that defines a networking framework for implementing protocols in seven layers). A gateway converts protocols among communications networks(also called as Protocol Converters). Consequently different networks using different protocols can communicate with each other. It is essential for a gateway to understand the protocols used by each network linked into the router.
A gateway may consist of devices such as protocol translators, impedance devices, rate converters, fault isolators, or signal translators as necessary to provide system interoperability. In addition, it is essential to establish mutually acceptable administrative procedures between both networks.
A router actually acts as a gateway too. However the difference lies in the fact that a router by itself transfers, accepts and relays packets only across networks using similar protocols. A gateway, on the other hand is able to accept a packet which is formatted for one protocol (e.g. AppleTalk) and convert it to a packet formatted for another protocol (e.g. TCP/IP) before forwarding it. A gateway can be implemented in hardware, software or a combination both, but are usually implemented by software installed within a router. Comparatively, gateways are slower than bridges, switches and (non-gateway) routers.
Another way to define a gateway is as a network point that acts as an entrance to another network.
On the Internet, it is possible for a node or stopping point to be either a gateway node or a host (end-point) node. Further explaining, both the computers of Internet users and the computers that serve pages to users are host nodes, while the nodes that connect the networks in between are gateways.
E.g.:- the computers that control traffic between company networks or the computers used by internet service providers (ISPs) to connect users to the internet are gateway nodes.
There can be gateways for different technolgies for example, SMS gateways, USSD gateways etc. So the concept of network gateway is as simple as that!
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