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A patch panel provides a convenient place to terminate (connect) all of the cable runs coming from different rooms into the wiring closet (or basement, right?). You also connect the cables going to the hub to the cables to the rooms through the patch panel.
Do you need a patch panel? You could skip the patch panel, and just put RJ-45 connectors on all the cables coming in and then plug them into the hub, but you'd miss these advantages:
You can (and should) label the patch panel so you know which room the cable run goes to. A wiring closet looks pretty chaotic. Without a patch panel, it is chaotic. If you want to disconnect a station from the hub, it's a lot easier if there's a label so you can see which cable goes to the station. By the way, putting the labels on the cables is tougher to read than labels on a patch panel and you run a real risk of the cable labels falling off.
Most cabling is wired "straight-through" from end to end. That means that pair 1 at the station is connected to pair 1 at the hub, pair 2 is connected to pair 2, and so forth. But sometimes you have to cross-wire some of the pairs between hub and station, like with a cable modem, or cross-wire to connect two hubs. With a patch panel, all of this cross-wiring is done in the patch cable. If you have to make any changes, like moving a station or hub, you just move the patch cable with it, instead of having to reterminate the cable run.
A patch panel is a step up from a punch-down block. It has connectors (usually on the back) for the cable runs to the stations. Each of those connectors is wired to an RJ-45 on the front. The RJ-45 on the front provides a spot to plug in a patch cable that goes to the hub.
On many patch panels, the back has Type 110-style connectors on the back, color-coded to match the color of the cable pairs. (Type 110 connectors were made popular by AT&T and have generally captured the Category 5 market.) The color-coding goes from pair one to four. If you buy a 568A-style panel, it automatically maps the pairs to the correct pins on the RJ45 to make a 568A connection, and if you buy a 568B-style panel, it maps to the pins on the RJ45 to make a 568B connection. If you select this kind of patch panel, it's essential that the style (568A or 568B) you pick on the patch panel matches the style of EVERY wall plate you install.
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