The word “hosting” doesn't describe only one service, but several services that offer various functions to a domain name. Having a site and emails, for instance, are two independent services despite the fact that in the general case they come together, so many people think of them as one single service. In fact, every single domain name has a couple of DNS records called A and MX, which show the server that deals with each particular service - the first one is a numeric IP address, that defines where the site for the domain is loaded from, while the latter is an alphanumeric string, which shows the server that manages the emails for the domain. For example, an A record is 123.123.123.123 and an MX record can be mx1.domain.com. Each time you open a website or send an e-mail, the global DNS servers are contacted to check the name servers that a domain address has and the traffic/message is first forwarded to that company. When you have custom records on their end, the browser request or the e-mail will be directed to the correct server. The reasoning behind using separate records is that the two services use different web protocols and you may have your site hosted by one company and the emails by another.
