When your website is created it has to be stored somewhere.  Technically, you can store your website on your computer, but whenever someone visits your website it’s going to use the resources (CPU & RAM) on your computer.  There is also a question of how fast the internet is at your house.  At the ‘dawn of the internet,’  a solution was found to have a data center that is full of computers (or servers) that websites are stored on.  These data centers have all the ‘works’ including a temperature controlled environment, generators, and very very fast internet connections.

When you buy hosting you’re technically renting space on one of those computers.  You’re renting a certain amount of space and bandwidth a month that you can use.