To better understand the concept of cold storage, you first need to get familiar with the basic principles of how cryptocurrency works. The first thing to realize is that coins that you possess are always sitting inside a global ledger called "blockchain". Your wallet never holds any coins, it is merely a means to get access to coins that, as we have already learned, are nothing else but entries in a ledger. A wallet performs three key functions: it manages keys, constructs and signs transactions, and broadcasts them to the network. Cold storage is basically a wallet that can do all these things except that it cannot broadcast transactions. They simply cannot do that because it always remains isolated from the Internet. The reason why you want it to be isolated from the online environment is that you want to protect your keys from hackers and other undesirable persons. It is easier to retain control over the private keys when you are the only person who knows keys actually exist.