It keeps cryptocurrency private keys in "cool" storage where they are securely offline.
In order to transact, you need to be plugged in and it will provide the keys to the "hot" online wallet on a case-by-case basis. With a hardware wallet, you confirm the transaction by physically pressing the buttons on the device.
This design protects your cryptocurrency by having the keys always offline and requiring physical interaction to confirm a transaction. It helps prevent remote theft.