• The green shaft comes from the engine through the clutch. The green shaft and green gear are connected as a single unit. (The clutch is a device that lets you connect and disconnect the engine and the transmission. When you push in the clutch pedal, the engine and the transmission are disconnected so the engine can run even if the car is standing still. When you release the clutch pedal, the engine and the green shaft are directly connected to one another. The green shaft and gear turn at the same rpm as the engine.)
• The red shaft and gears are called the layshaft. These are also connected as a single piece, so all of the gears on the layshaft and the layshaft itself spin as one unit. The green shaft and the red shaft are directly connected through their meshed gears so that if the green shaft is spinning, so is the red shaft. In this way, the layshaft receives its power directly from the engine whenever the clutch is engaged.
• The yellow shaft is a splined shaft that connects directly to the drive shaft through the differential to the drive wheels of the car. If the wheels are spinning, the yellow shaft is spinning.
• The blue gears ride on bearings, so they spin on the yellow shaft. If the engine is off but the car is coasting, the yellow shaft can turn inside the blue gears while the blue gears and the layshaft are motionless.
• The purpose of the collar is to connect one of the two blue gears to the yellow drive shaft. The collar is connected, through the splines, directly to the yellow shaft and spins with the yellow shaft. However, the collar can slide left or right along the yellow shaft to engage either of the blue gears. Teeth on the collar, called dog teeth, fit into holes on the sides of the blue gears to engage them.

Now, let's see what happens when you shift into first gear

First Gear
 

The picture shows how, when shifted into first gear, the collar engages the blue gear on the right:

In this picture, the green shaft from the engine turns the layshaft, which turns the blue gear on the right. This gear transmits its energy through the collar to drive the yellow drive shaft. Meanwhile, the blue gear on the left is turning, but it is freewheeling on its bearing so it has no effect on the yellow shaft.

When the collar is between the two gears (as shown in the first figure), the transmission is in neutral. Both of the blue gears freewheel on the yellow shaft at the different rates controlled by their ratios to the layshaft.

• When you make a mistake while shifting and hear a horrible grinding sound, you are not hearing the sound of gear teeth mis-meshing. As you can see in these diagrams, all gear teeth are all fully meshed at all times. The grinding is the sound of the dog teeth trying unsuccessfully to engage the holes in the side of a blue gear.
• The transmission shown here does not have "synchros" (discussed later in the article), so if you were using this transmission you would have to double-clutch it. Double-clutching was common in older cars and is still common in some modern race cars. In double-clutching, you first push the clutch pedal in once to disengage the engine from the transmission. This takes the pressure off the dog teeth so you can move the collar into neutral. Then you release the clutch pedal and rev the engine to the "right speed." The right speed is the rpm value at which the engine should be running in the next gear. The idea is to get the blue gear of the next gear and the collar rotating at the same speed so that the dog teeth can engage. Then you push the clutch pedal in again and lock the collar into the new gear. At every gear change you have to press and release the clutch twice, hence the name "double-clutching."
• You can also see how a small linear motion in the gear shift knob allows you to change gears. The gear shift knob moves a rod connected to the fork. The fork slides the collar on the yellow shaft to engage one of two gears.