How do you have mic and headphones at same time?

Skype website (shop - accessories) suggests headsets

which mac are you using ? for instance on iMac G5 I use the internal microphone and plug in a cheap philips headphones only because I tend to get distorted sound due to mic being next to the integrated loudspeakers.

Just need to check the prefs in syspref sound and skype pref to make sure it is recognised.
Since my Macintosh model includes a microphone jack, I am able to plug into it a Andrea NC-71 headset.
Note: the microphone connectors of Macintosh'es do not accept standard mic plugs. Here is a picture and drawing of the extended style microphone plug.

While, I do not use 'Skype', I have used the NC-71 headset to record voice messages, and with 'iChat'.

Should your (unknown model) Mac not have a microphone jack; but, does have a USB connector, you will require a USB device - such as the iMic to input sound; of which you can plug in any style of microphone / headphone / headset - proper plug (or adapter) permitting.
Ohhh, you have either a 'Mirrored Drive Doors' or 'FW800' PowerMac G4!
I just happed to stumble across this Apple web page, doing some unrelated work.
Scroll down to Figure 1.

It would have been very helpful if the inital post had specifically identified the G4.
Your third post explicitly stated 'The following URL shows what the back of my G4 looks like with the jacks. Which jack would I use?'. In my second reply - Figure 1 of the Apple link - shows each 'jack' identified.
Note: 'happed' was meant to be 'happened'.

I did omit, what Khama noted - that a USB mic / headset could also be used (plugged directly into any Mac's USB port). The benefit of the iMic is - you can use practically any 'standard' microphone, including headset based microphones, via the 'standard' (non-unique Apple) microphone jack.
Since the iMic has a headphone jack as well - you can use practically any headphone / headset headphone.

Which specific model headset? - that is a personal decision (sound quality of the headphone, voice quality of the microphone, weight of head set, number of headset speakers, which side the microphone is mounted, etc.); and, some models were mentioned.
Here are some Google text and images search results.