Hosted Systems are PBX systems located at a service provider facility. Typically an office would have a central computer/phone room or closet where outside lines come in and connect to the telephones on the desks. Much like email can be hosted by an ISP, today your telephone system can be hosted. The system and outside lines are located at a hosting facility and an internet connection extends the service to your desk phones wherever you are located. This facility should be a redundant hardened facility able to provide service during just about any disaster.