It is part of a home heating and cooling system that is installed on the outside of your home.  The Heat Pump extracts heat from the cold outside air and transfers it to inside your home.  In warmer months, it extracts the heat out of the indoor air to keep your home cool.  Air to Air Heat Pumps can provide hot or cold air, but usually do not provide hot water.  Air to water Heat Pumps make use of radiators or in-floor heating to heat your house and used to provide hot water as well.  These are Air Source Heat Pumps because they absorb heat from the air.  Water Source Heat Pumps suck thermal energy from a pond or stream.  Geothermal Heat Pumps draw heat from the ground or groundwater.