Internet Exchange Points - acronym of (IXP) or (IX) - form an integral part of the physical structure of the Internet. Internet Exchange Points allow Internet computer networks - specifically Internet Service Providers (ISPs) - to exchange traffic (data routing) across their networks.
Internet Exchange Points have evolved from: Federal Internet Exchanges (FIX), Network Access Points (NAP) and Commercial Internet Exchanges (CIX). Each of these exchanges were created to transition the Internet away for government agencies (in the early 1990s), and allow commercial networks to access and eventually become the backbone of the Internet.
Transferring data long distance (transatlantic for example) could/can be prohibitively expensive for ISPs without access to an IXP; who only have/had access to a single upstream transit provider. IXPs allow ISPs to link their networks and "cut" upstream transit providers out of the equation.
Internet Exchange Points are useful to ISPs for a number of reasons:
Out of all the reasons why an ISP will traffic data through an IXP: cost is usually the primary reason. Many IXP's are non-profit organisations (like LINX: London Internet Exchange): so traffic routed through the IXP (LINX) will be free for ISPs; the only cost an ISP will have is the membership fee to join the IXP. IXP's tend to restrict membership to only ISPs; and refuse contact with members of the public - directing member of the public to chat to their ISP if an error occur with traffic routed through the IXP. LINX, for example, has members from: Europe, North America, Asia and Africa; who are able to exchange traffic "freely" across continents.
The primary technology (2014) that IXPs use is a network switch; previously it was a network hub. Each ISP connects to a port on the IXP network switch. A network switch is more efficient than a hub, because a message is only sent to the port (ISP) which requests it; not to every port, like with a hub. The technology which IXPs use is continually evolving: LINX, for example, were the first IXP to implement a 100-megabit switch.