A Firewall is a device to which you connect your computer or network, or a piece of software that you install on your computer. The firewall's purpose is to block unauthorized access to devices on your network or to your machine.
Firewalls work by analyzing every packet of data that is passed through it and applying rules to those packets. If there is a rule that says that the packet is allowed through, it will allow it to pass, otherwise it will drop the packet and it will never reach your computer. This analysis of the packets and deciding to drop or pass it through is called Filtering.
An example of how this process works is as follows:
You have a computer at home that is acting as a web server. That web server uses the TCP/IP port 80. You want everyone in the world to be able to connect to your web server and see your website, but you do not want them to be able to reach anything else on your computer. You would create a rule in your firewall specifying that all traffic for port 80 would be passed through, but all other traffic would be dropped. Then whenever a packet of data would reach your firewall, your firewall would compare that packet against the rules you created. If it sees that the destination for that packet is port 80, which is your web service running on your computer, it would allow it through, otherwise it would drop it.
Many of the software firewalls also include the ability to have application protection. In this case, the firewall only lets certain applications that you choose to allow to use the Internet. This protects against viruses or trojans from using your computer to infect other computers without your knowledge and permission.
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