A hub receives signals from clients and retransmits it to all clients. If two clients send messages to the hub at the same time, the hub merely ignores one, and since the client is not acknowledged, it resends it at a random time. If there are too many collisions from a specific client, the hub may ignore it.
Since clients need to send and listen for collisions, they can operate only at half duplex mode, and bandwith is shared between all the systems (see this link, stolen from moif murphy). All clients share the 10 mbps, and should heavy traffic go between two systems the rest will be affected
Should a port misbehave, it'll simply be disconnected from the shared connection.
Also, since the hub transmits all messages to all systems, you can listen into packets meant for other systems.
I'd note that in every way, except when network sniffing is required a switch is better - clients work at full duplex mode, there's no collisions, or promiscuous re transmission, and they work at better than 10mbps.