That's another way to say seller financing, or, as we say in Texas, "we tote the note." Instead of the bank providing the funds to purchase the house, the seller gives the house to the buyer in exchange for a promissory note secured by a mortgage. It's usually used when the buyer can't afford a down payment or can't secure traditional financing.
The advantage to the seller is they receive a steady income stream at a higher rate than if their money were sitting in a bank, assuming the buyer doesn't default, of course.
I believe there are several people on BP who are very active in seller financing and feel that's it's more lucrative than investing in rentals.