In Japan, a "host" (ホスト hosuto) is a male worker at a club whose job is to entertain a female clientele. The clubs at which hosts work are called "host clubs". Host clubs (and their cross-gender counterparts, hostess clubs) are not really found outside Japan or places with a large Japanese diaspora as far as I know, so it isn't surprising that you wouldn't have heard of them. See the Wikipedia article "Host and hostess clubs" for more details.
Having never actually been to a host club, I'm not in the best position to evaluate the one depicted in Ouran, but based on my secondhand understanding, the Ouran Host Club is sort of a less-seedy version of what you'd see at an actual host club.
That said, I'd bet you any amount of money that no actual high school in Japan (or anywhere else for that matter) has a host club. The very idea of a school allowing minors to do something of that sort is ludicrous, which is part of what makes Ouran so funny.