The 5-4-3 rule also referred to as the IEEE way (contrary to the Ethernet way) is a design guideline for Ethernet computer networks covering the number of repeaters and segments on shared-access Ethernet backbones in a tree topology. It means that in a collision domain there should be at most 5 segments tied together with 4 repeaters, with 3 segments containing active senders (i.e. terminals).
This rule is also designated the 5-4-3-2-1 rule with there being two network segments and one collision domain.
The 5-4-3 rule was created when 10BASE5 and 10BASE2 were the only types of Ethernet network available. The rule only applies to shared-access 10 Mbit/s Ethernet segments connected by repeaters or repeater hubs (collisions domains). The rule does not apply to switched Ethernet because each port on a switch constitutes a separate collision domain. With mixed repeated and switched networks, the rule's scope ends on a switched port.
According to the original Ethernet protocol, a signal sent out over the collision domain must reach every part of the network within a specified length of time. The 5-4-3 rule ensures this. Each segment and repeater that a signal goes through adds a small amount of time to the process, so the rule is designed to minimize transmission times of the signals.