Well it could mean you have it running on large distributed infrastructure that auto provisions additional resources as they are required and scale back down again when they are not...
For the most part it seems to mean rack n stack cheap vm's.
As for "dont have the resources to host Moodle ourselves" what exactly does "host ourselves" mean?
I would wager most Moodle partners dont own their own servers, they are almost certainly leased, perhaps some co-locate.
I believe BlackBoard Moodlerooms were hosting on Dells Cloud infrastructure, not sure if they are on BB's own hardware now. Others describe hosting in nuclear bunkers protected by drones, claymore's and attack dogs, clearly not their own DC which means they are not physically hosting the server even if they own it so really, whats the difference?