I'm going to start off by simply saying that most people do not understand what hosting is and I hope my explanation here will help you if you are one of those who struggle with understanding this. I'm going to explain hosting using an analogy.
Imagine that you just purchased all new furniture for your apartment. The furniture is delivered, the old furniture is hauled away and you are sitting on your sofa watching a movie on your brand new big screen HD TV. You paid a lot of money for your new furniture, but you only paid for it once. It makes you happy because it looks great, for now.
However, on the first of next month you have to pay rent to your landlord. You have to pay rent every month without fail otherwise you and your brand new furniture will be evicted.
What do you get for the rent you pay every month? In my area of the United States you get a roof over your head and running water. Most landlords make you pay for utilities too; and other landlords also make you pay for repairs to your apartment.
Now let's equate this to your website and hosting. You should consider your website to be nothing more than great furniture. You paid for it once and it's yours.
On the other hand, if you want your website to be live on the internet then you need to pay a monthly rental charge so you and your furniture can maintain an address on the internet.
This monthly website rent is called "hosting" and every website needs to pay for it.
Just like different apartment rental agreements, the services included in your hosting will vary from one company to another. Most hosting companies will offer email accounts included in the monthly fee. Some companies will also include anti-virus protection and anti-spam protection for the emails they host.
Almost all hosting companies will charge different fees depending on the amount of hard drive space your website requires and the amount of usage your website gets every month.
Every hosting company provides a yearly payment option that is less expensive to pay up front than on the 1st of every month.