Registering a domain allows you to have your own 'address' on the world wide web. As in real life, no two people can have the same address. Domain names are handled by different companies for each country, in the UK the official registry is handled by Nominet who deal with all .uk domains (each such company is ultimately responsible to ICANN). Rather than deal with Nominet directly, you can use a number of other registrars who act as a go between, such as UK Reg. These companies basically cover Nominet's fees for registering a domain and add a little charge to cover their costs.
Once you've registered a domain that information (linking your domain name with your registrar's 'name servers' which in turn redirect any visitors to your site) is 'propogated' around the web, updating all the records on select servers the world over, meaning that after a few hours anyone with access to the web will be directed to your website.
Your personal information (credit card details etc.) will always remain confidential with the company you registered with, but your name and address may be published online in so-called WHOIS records. These basically detail when a domain was registered, who it is registered to, the name servers and how long it is registered for (you cannot buy a domain name, buy you may keep renewing it perpetually).
These records are a bit like a phone book. In the UK things are slightly different in that there is a special domain called .me.uk which is for individuals, not companies like .com and .co.uk. Because individuals have greater privacy needs, if you register a .me.uk domain you can opt out of having your address (but not your name) published in WHOIS records (as this will often by your home address).
This is a very brief overview, so don't take it as particularly accurate! I'm sure there are lots of FAQs about this if you care to Google it.
Kind Regards
Jonty
P.S. Registering a domain is distinct from having a web host, which hosts the website your domain name points to.
At best the wording is misleading. In this context 'buy' equates to them transferring the domain to you as if you registered it, and 'rent' implies they'll keep the domain in their name but redirect it to your site. I'd stay well clear of any such schemes as a) they're very expensive b) they're not officially accountable companies c) you don't know what they'll do with your personal information.
Oh don't worry, I have no intention of getting involved with a scheme like that; I just happened across it when I was looking for domains with 'first aid' in the title. I'm trying to make a whole bunch of websites that are exactly what their name suggests, like Maljonic's Dreams being all about dreams and Planet Surveyor being all about planets. I did a first aid course the other week for my job and wondered if there was a first aid domain name that is actually about first aid; I was pretty sure that some idiot would have already used it for an insurance company or something like that and, sure enough, I couldn't find one example of a first aid domain name that was actually about first aid. Not that it really matters in the whole scheme of things, perhaps I'm too nit picky; but it would have been nice to have at least one first aid related site on a www.firstaid or www.first-aid domain, that's what I think anyway.
A sidenote to Jonty's mention of .me.uk, there is a service on many registrars called WhoisGuard or Whois Protect which stops that infomation being shown in a whois search... although it does cost more iirc.
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