This term is used to describe equipment which is physically located in your offices. The alternative would be a third party hosted service such as those offered by cloud hosting providers.
All computers need code to tell them how to interact with their components eg keyboards, mice, monitors etc. They also need code which tells them what to do when switched on, how to store files and how the file store is structured. All of these services are provided by the Operating System, or OS for short. The most common operating systems for desktop and laptop computers are Microsoft Windows, Mac OS and Linux. Smartphones and tablet devices also have operating systems, the most common being Apple iOS, Android, Blackberry and Windows Mobile.