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Ethernet and Phone over existing cat5 wiring

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Basically was looking into using my existing wiring to have ethernet connections around the house (two story) where there are line jackpoints.I read this artice, seems pretty straight forward.http://www.instructables.com/id/Hack-your-House-Run-both-ethernet-and-phone-over-/However, one part that confuses me is how will the ethernet part of the cabling know which jack is connected to which. My basic understanding is that jacks are all linked together like a loop.Sorry if I may come across stupid in anyway, just trying to expand my knowledge and know if I should be attempting this.


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