Yes, it is totally transparent, the ports are auto-sensing, but there's still a (virtual) two-port switch in there.

In particular, from Netgear's website (talking about the DS108):

Each unit has a built-in self-learning bridge which provides the communications link between the 10 and 100 Mbps network devices. The intelligent bridge automatically manages network traffic such that 100 Mbps traffic does not unnecessarily crowd the 10 Mbps network segment and 10 Mbps traffic does not crowd the 100 Mbps segment.

Personally, I'd get a switch (I have a pair of Netgear FS108 switches at home). They're not much more expensive, and performance is better.