The word “hosting” doesn't describe only one service, but a variety of services that offer various functions to a domain name. Having a website and e-mails, for instance, are two independent services although in the general case they come together, so most of the people see them as one single service. The truth is, each domain has a several DNS records called A and MX, which show the server that deals with each specific service - the former is a numeric IP address, that identifies where the website for the domain is loaded from, while the second one is an alphanumeric string, which shows the server that handles the emails for the domain address. As an illustration, an A record is 126.96.36.199 and an MX record is mx1.domain.com. Each time you open a site or send an email, the global DNS servers are contacted to check the name servers that a domain has and the traffic/message is first directed to that company. When you have custom records on their end, the web browser request or the e-mail will then be forwarded to the correct server. The reasoning behind using separate records is that the two services employ different web protocols and you can have your site hosted by one provider and the e-mails by another.