It is a remote server that you can log into and control. Think of it as a second PC that you can use.
I think you need at least Windows Vista Pack 2 or higher, and 1-2 Gigs of RAM should suffice.
For an actual server, I think it is Windows 2008 R2 or higher.
Just Google Windows VPS if you need to find one. I don't personally use one so I have no suggestions on which hosting provider is good.