Your installation and your architecture are maintained on-premises in a datacenter that your organization controls:

In this scenario, customers have Skype for Business deployed in their infrastructure in their on-premises servers. You can learn more about this at https://docs.microsoft.com/en-us/skypeforbusiness/plan-your-deployment/topology-basics/reference-topologies.

The following image is a reference topology used for small organizations:

You can read more about how to start to plan your Skype for Business on-premises at https://docs.microsoft.com/en-us/SkypeForBusiness/plan-your-deployment/plan-your-deployment.