A simple switch gear is just a switch. The home is connected to the power utility grid. When the grid goes out, you flip the switch to the generator position. You start the generator, and it feeds electricity to the home. You turn the generator off when the grid power returns, and flip the switch back to grid power. This is the simplest form of a switchgear, but it is outdated. In 2011, newer automatic switches are computer controlled and replace a manual flip switch.
An automatic transfer switch (ATS) always watches grid power. (See reference 1, paragraph 2) If grid power goes out, the internal computer in the ATS instructs the generator to start and diverts the home to the generator. In order for this to happen, modern generators have an electric start feature. An internal battery, similar to a car battery, inside the generator's housing provides the electricity for the starter motor. When the utility power comes back on, the ATS senses this, and shuts the generator off (see reference 2). An ATS is compact, and many modern generators have the ATS built right into the generator's housing.
Your home cannot be connected directly to the generator and the grid at the same time. If it were, short circuit conditions develop. This can destroy your home or generator wiring. The whole point behind having switchgear, either manual or automatic, is to provide a barrier between the generator and the grid. (See reference 1, paragraph 1). A switchgear allows the public utility grid or a generator to feed the home, but not both at the same time.
An ATS allows for hands-free operation of the system. You don't have to worry about switching and starting the generator, the internal microprocessor does this automatically. However, you must maintain the generator. Always check the internal starting battery charge level, and replace the battery if it is not holding a charge. Also, you must make sure the fuel tank is full. Finally, the generator has a diesel or gasoline engine. You have to perform manufacturer's recommended maintenance on it, such as changing the oil, all the filters, and run it on a regular basis to prevent moisture accumulation.