Heroku is a cloud platform as a service. That means you do not have to worry about infrastructure; you just focus on your application.
In addition to what Jonny said, there are a few features of Heroku:
Heroku provides very well written tutorial which allows you to start in minutes. Also they provide first 750 computation hours free of charge which means you can have one processes (aka Dyno) at no cost. Also performance is very good e.g. simple web application written in node.js can handle around 60 - 70 requests per second.
Heroku competitors are:
It's a cloud-based, scalable server solution that allows you to easily manage the deployment of your Rails (or other) applications provided you subscribe to a number of conventions (e.g. Postgres as the database, no writing to the filesystem).
Thus you can easily scale as your application grows by bettering your database and increasing the number of dynos (Rails instances) and workers.
It doesn't help you avoid using servers, you will need some understanding of server management to effectively debug problems with your platform/app combination. However, while it is comparatively expensive (i.e. per instance when compared to renting a slice on Slicehost or something), there is a free account and it's a rough trade off between whether it's more cost effective to pay someone to build your own solution or take the extra expense.
Heroku Basically provides with webspace to upload your app
If you are uploading a Rails app then you can follow this tutorial https://github.com/mrkushjain/herokuapp
As I see it, it is a scalable administrated web hosting service, ready to grow in any sense so you don't have to worry about it.
It's not useful for a normal PHP web application, because there are plenty of web hosting services with ftp over there for a simple web without scalability needs, but if you need something bigger Heroku or something similar is what you need.
It is exposed as a service via a command line tool so you can write scripts to automate your deployments. Anyway it is pretty similar to other web hosting services with Git enabled, but Heroku makes it simpler.
That's its thing, to make the administration stuff simpler to you, so it saves you time. But I'm not sure, as I'm just starting with it!
A nice introduction of how it works in the official documentation is:
https://devcenter.heroku.com/articles/how-heroku-works
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