I have recently run across these terms few times but I am quite confused how they work and when they are usualy implemented?
Well, think of it this way.
If you use an array, a simple index-based data structure, and fill it up with random stuff, finding a particular entry gets to be a more and more expensive operation as you fill it with data, since you basically have to start searching from one end toward the other, until you find the one you want.
If you want to get faster access to data, you typicall resort to sorting the array and using a binary search. This, however, while increasing the speed of looking up an existing value, makes inserting new values slow, as you need to move existing elements around when you need to insert an element in the middle.
A hashtable, on the other hand, has an associated function that takes an entry, and reduces it to a number, a hash-key. This number is then used as an index into the array, and this is where you store the entry.
A hashtable revolves around an array, which initially starts out empty. Empty does not mean zero length, the array starts out with a size, but all the elements in the array contains nothing.
Each element has two properties, data, and a key that identifies the data. For instance, a list of zip-codes of the US would be a zip-code -> name type of association. The function reduces the key, but does not consider the data.
So when you insert something into the hashtable, the function reduces the key to a number, which is used as an index into this (empty) array, and this is where you store the data, both the key, and the associated data.
Then, later, you want to find a particular entry that you know the key for, so you run the key through the same function, get its hash-key, and goes to that particular place in the hashtable and retrieves the data there.
The theory goes that the function that reduces your key to a hash-key, that number, is computationally much cheaper than the linear search.
A typical hashtable does not have an infinite number of elements available for storage, so the number is typically reduced further down to an index which fits into the size of the array. One way to do this is to simply take the modulus of the index compared to the size of the array. For an array with a size of 10, index 0-9 will map directly to an index, and index 10-19 will map down to 0-9 again, and so on.
Some keys will be reduced to the same index as an existing entry in the hashtable. At this point the actual keys are compared directly, with all the rules associated with comparing the data types of the key (ie. normal string comparison for instance). If there is a complete match, you either disregard the new data (it already exists) or you overwrite (you replace the old data for that key), or you add it (multi-valued hashtable). If there is no match, which means that though the hash keys was identical, the actual keys were not, you typically find a new location to store that key+data in.
Collision resolution has many implementations, and the simplest one is to just go to the next empty element in the array. This simple solution has other problems though, so finding the right resolution algorithm is also a good excercise for hashtables.
Hashtables can also grow, if they fill up completely (or close to), and this is usually done by creating a new array of the new size, and calculating all the indexes once more, and placing the items into the new array in their new locations.
The function that reduces the key to a number does not produce a linear value, ie. "AAA" becomes 1, then "AAB" becomes 2, so the hashtable is not sorted by any typical value.
There is a good wikipedia article available on the subject as well, here.