Colocation hosting is where you provide the servers and the hosting company provides the rack space, network, connectivity, and on-site support as needed. Colocation customers often build their own servers, customized with the hardware, software, and components they want to use. Then they ship their newly built servers to a colocation hosting provider.
Colocation hosting providers charge per server, per half rack, per whole rack, and per cage. A per server charge is typically indicated as 1U. A full rack can hold 42 1Us. A half rack can hold 21 1Us. Of course that number can vary depending on the size of the server. And a cage can hold, well, it depends on the cage size and how much space the data center has allocated for cage space.