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Can anybody please explain whats are hosted apps and how do we deploy them. Thanks in advance.

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First of all, its not apps, now its called as add-ins.

Note The name "apps for SharePoint" is changing to "SharePoint Add-ins". During the transition, the documentation and the UI of some SharePoint products and Visual Studio tools might still use the term "apps for SharePoint". For details, see New name for apps for Office and SharePoint.

SharePoint Hosted Add-ins

SharePoint-hosted add-ins, or apps where all components are hosted on either an on-premises or Office 365 SharePoint farm. SharePoint-hosted add-ins are installed on a SharePoint 2013 website, called the host web. They have their resources hosted on an isolated subsite of a host web, called the app web. It’s important to know the difference between host webs and app webs

Reference here

Deployment:

Deployment steps include the following:

  • Publish the app
  • Find the *.app file in published copy
  • Upload the *.app package in App catalog
  • Add the add-in by going to site content of any site.

Find deployment steps in detail here

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