I did some research on this a while back, but I'm not sure how current routers/modems/ISPs handle this these days and I've been digging around google for a few hours without much luck.
It's my understanding that my home wireless router, as well as my home cable modem, as well as my ISP all do bits and pieces of throttling and provisioning to be able to handle connections that may happen in the future. My understanding is that at each level there is usually some kind of throttling/governing, so I'll rarely see my full available throughput even if I'm the only current client connected.
For example, if I have one computer connected to my wireless router at home and download a 100 GB file, and then I connect a second computer and each computer downloads a 100 GB file concurrently, the bandwidth used with 2 computers would be greater than with 1 computer.
Obviously, there are many scenarios where this can be proven true or false - I'm interested in a general home user setup and what happens generally. Does anyone have specific data that proves this right or wrong? Can you point me to specific sources?
The internet isn't nearly as complicated as you think :-)
Routers determine the direction that data packets need to be sent (routing) and then forward those packets as quickly as possible. Throttling might happen if you have a line that has more bandwidth than what you are paying for. For example if you have a 100mbit/s line but you have a subscription for 50mbit/s. Often if you pay for the full speed that the line can handle then the available bandwidth of the line is the throttling all by itself.
And the way throttling (either because of line limitations or configured) works is simple: drop packets that exceed the limits. The internet is made to work with dropped packets. TCP for example retransmits the lost packets and lowers its sending speed accordingly. Protocols that use UDP do the retransmission themselves if necessary. Etc.
QOS (Quality of Service) is the name of technologies that determine which packets to drop. If you have a download and a voice call at the same time you might not notice the download losing a few packets and slowing down. The lower audio quality might be more important to you, so you configure the equipment in such a way that if it has to drop something it will try not to drop voice packets but choose other packets instead.
For most internet connections no planning is involved. A router doesn't remember anything about packets that it has forwarded (firewalls do). It just forwards packets as fast as possible/allowed and drops them otherwise. The intelligence for dealing with this is at the edges (PCs, servers, smartphones etc.) which is what makes the internet so cheap and flexible.