A hostel means simply a shared accommodation. Instead of staying in a private room with a private bathroom, you stay in a dorm room sharing the room with other people.
It means, it is a place where traveler sleep on a budget and share the space.
However, over the time a hostel has became a hotspot for travelers to mingle. Hostels have evolved to be more than a bed to sleep in. There is common areas, a kitchen to share, events and now as well even private rooms.
That being said, a hostel has always been and will always be: A place to meet other people!