This is anything outside of the computer or interface that you’re using that contributes to the recording or mixing process. This could be a character pre amp as previously discussed or it could be an Equalizer, Compressor or Reverb unit. Many plugins today emulate these processors but many engineers still prefer the physical version due to a number of factors including of course,particular sound they have.
When starting out, all you really have to go on is what others say so it’s best not to rush into a purchases here as outboard equipment can be very expensive especially when compared to its digital counterpart. I would advise a period of learning and trying out equipment wherever possible to ascertain what a particular piece does, only then can you really judge if you need it in your set up and you have the budget for it.
Jack Joseph Puig sitting in what appears to be a space station!