Market: they are in the upswing, see this article.
How they work: D-Link example.
- Filtering inbound traffic: allowing special applications, redirecting traffic to specific servers, denying all other inbound traffic.
- Filtering outbound traffic: allowing/denying specific LAN hosts to use certain ports.
- NAT and DHCP: all LAN hosts use local IP numbers, only the gateway has both a local IP number and a regular Internet IP number.
- NAT - network address translation - converts the request of a host in the LAN to the gateway IP number when sending an outbound request, and convert back to the local IP number when receiving an inbound reply.
- DHCP: automatically assigns local IP numbers, DNS, etc., to hosts in the LAN, as shown in this example (disabled).