Reseller hosting is an option that involves one company (a hosting provider) renting hard drive space and bandwidth to another company (small-mid size business), who then rents the space to third parties (entrepreneurs-small business).
Simply put, reseller hosting is the ability to provide hosting to your own clients as if you yourself were the web hosting company.
Here are the (perhaps over-simplified) steps to establishing a reseller business:
1) Research and select a hosting company
2) Purchase the reseller package that meets the goals of your business
3) Know and understand your target market to locate your new customers
4) Create your own branded hosting packages
5) Decide your price
6) Sell hosting packages to your clients
7) Earn profit