"The critical question here is - what does "hosting" mean in this context? Is there a specific application?"
In this case, instead of the customer purchasing the software and installing the clients and the backend, we lease them the software and the backend is here (Web Services and all) and the client is a Web Deployed desktop app that will go through firewalls. Advantages to leasing are that they don't have to support it, don't need a maintaince contract, and they don't need any hardware such as IIS servers and so on. It's all taken care of here. They setup an account with us, we create a DB for them and put the users in so when the user logs in, they will be directed to the right DB. Then from that point on, the web does the deployment of the client app and the customer is up and running. You can read messages from the Advanced DOTNET archive, unsubscribe from Advanced DOTNET, or subscribe to other DevelopMentor lists at http://discuss.develop.com.
