Website hosting is the server where your files and database "live". It is required for your website to be visible on the internet. This kind of server is called a Web Host.

Your domain name, the mywebsite.com piece, is the "URL" or "web name" of your website and is separate from the hosting. The domain name is often the same as your business name, but it doesn't have to be. Depending upon which names are already registered and unavailable, you may need to find alternative names or variations for your URL.

The domain name has a setting that points to the web host server where your website files are. It's not uncommon to buy a domain name when you have a website setup, especially if you start using a build it yourself system, so people often think they are linked together.

In reality they are separate.You can have your domain name registered using one company and have your website hosting by a separate company. There are only a few companies that can sell/register domain names, but there are thousands of companies that provide website hosting.

While not required, most of my customers have me host their sites so they have one person to contact for all things related to their web site.

Extra Info:

Some people will create secondary websites or landing pages they can use for marketing projects. EG: Authors will create a website just for a single book (booktitle.com) or you can run social media advertising campaigns for a specific sales event you're hosting (mysupersalesevent.com). This is done, in part, to track how well your advertising is working, as well as, being able to have a unique design just for that page.