Colocation is the most basic type of advanced hosting, in which the hosting provider houses your server in its data center. You receive rack space (along with its associated power supply, climate control, and security) and bandwidth, but retain full control - and responsibility - for the server's configuration, administration and maintenance.
Note: bandwidth sometimes not provided and you must source it yourself by purchasing from an ISP within the data center or ordering your own circuits.
Also, most colocation customers receieve basic server support (i.e. "remote hands assistance" at no additional charge. Advanced support (i.e. hardware and software administration) is usually provided at additional charges.