In the above diagram, the S represents the segment or in plain english, one part of the network. The R is the repeater, e.g a hub.
Assuming we required to setup a silly network like the one above, then we would only be able to populate (put pc's) in segments S1, S3, S5 (3 populated segments MAX.).
Keep inmind that the 5-4-3 rules is applies only for 10base2 (coaxial), 10Base5, and 10baseT (utp) ethernet networks.
These limitations have got to do with the amount of time a signal requires to travel from one host to another, depending on how fat apart they are. If you violate this rule, then you start getting networking connectivity problems.
The 5-4-3 rule was created back when 10base2 and 10base5 were used in networks.
The limitations can easily be overcomed by using switches, because switches work in a very different manner and are not confined to the same limitations Hubs or repeaters have.
There will be a page covering the 5-4-3 rule in the future - its on the list [img]images/smiles/icon_smile.gif
I hope the above helps clear things for you.
p.s Goodluck with your Network+ - its a easy exam and will definitely teach you a lot about basic networking concepts.