What does a modem do in a home network setup?

A modem serves the crucial role of connecting your home network to the internet service provider (ISP). It acts as a bridge between the local network and the wider internet, converting digital signals from your home devices into a format suitable for transmission over telephone lines, coaxial cables, or fiber-optic connections used by ISPs. By facilitating this connection, the modem allows all devices on the local network, such as computers, smartphones, and smart appliances, to access the internet.

The other options detail functions that do not fall under the primary responsibilities of a modem. Creating a local area network (LAN) is usually the role of a router, which organizes inter-device communication within the local network. While file sharing can occur in a LAN setup, it does not pertain to the modem's functionality. Monitoring network traffic typically involves specialized network management tools or software rather than the basic operation of a modem. Thus, connecting to the internet service provider is fundamentally what a modem does in a home network setup.