Co-location is where you get your own server and set it up at someone else's office/location. Their people will provide the 24/7 monitoring and the connectivity to the net. They generally charge a flat amount per month + so much per GB of bandwidth. Here's one example pricing structure for co-location:
http://www.hostman.com/colocate.html Because you are generally providing the hardware, the co-location site should be somewhere physically close to you. This would allow you to go down to the site for hardware upgrades and troubleshooting.
[ September 10, 2001: Message edited by: SWFan ]