The term 'on premise CRM' refers to hosting CRM software on the company's own server. The opposite term is 'cloud CRM' or 'on demand CRM'. There is a number of reasons why many companies opt for self hosted CRM, rather than going with the cloud.
First, on premise CRM usually comes with open source code access, meaning it can be customized in a way cloud CRM can not. Second, self hosting gives companies full control over their data. Finally, total cost of ownership for on premise CRM is frequently significantly cheaper than monthly cloud plans.
If you are looking for free or affordable CRM software, available both in cloud and on premise, with over 20 sales and marketing tools, consider Bitrix24 CRM.