Auto sensing is the ability of Ethernet equipment (hubs, switches, NICs) to choose the speeds at which to operate. Auto sensing employs signaling methods to probe the network and find compatible Ethernet speeds. This technique was invented in order to facilitate the conversion from traditional to fast Ethernet equipment.
As soon as a connection is established, the devices are able to decide on a common speed, if network support is available the speeds can run up to 100mbps, other wise they run at the lowest common denominator of 10mbps.
The machines in a network can run at different speeds, this is possible since mosr hub and switches can auto sense port by port. 10/100 equipment usually has two LED light to show the speed setting that is being used.