In reference to this quote, what is actually meant by a "non-hosted" server. I'm not familiar with the concept. Does it simply mean a server that is kept locally and turned off most the time (surely not)? I would greatly appreciate some input on what exactly this means. Thanks in advance for the replies 
Hope you might find some reference here: https://www.blackbaud.com/files/support/howto/nonvshosted.pdf
It was a google search result by the way.