If I have a LAN and and connect it with a switch, I understand it uses a CAM table to route packets in layer 2 (by saving mac to port relations). So far all good.

However, when using a router for a LAN (ONLY for a LAN, not to connect it to "the outside" WAN/internet/etc) I get a bit confused as to how it internally processes packets. I would first split this into two router scenarios:

Router with buit-in switch

In this scenario, I would expect that it will act exactly as a switch with a CAM table internally. This would probably benefit a bit in speed (guessing here?) compared to the next option.

Router without built-in switch

Here is where I get confused. If hostA wants to send a packet to hostB, it will ARP to find hostB's MAC address and send it there. Now, if we had a switch (above scenario) this would be easy. But how does it work now in a router WITHOUT a switch?

If I would guess, hostA would send an Ethernet frame with hostB's MAC address to the line. The router would fetch the packet (even though the router has another MAC address, it would still fetch this packet even if it only contains hostB's MAC address). It would strip the Ethernet frame header and check the IP, and then check its own internal ARP table again for the MAC address.

Now, this would seem like a waste of resources compared to a router with a built-in switch. But maybe it does not work like that at all. Does it also contain a CAM table? If that would be true, what would then the difference between these two routers really be?