Colo is a shortened term for
Co-Location, usually used with regard to the housing of
network related computer equipment (
internet servers mostly, and the things that make them talk to the
internet).
Typical colo sites feature high security, very cold room temperatures, and vast amounts of odd chain-link style structures, filled with said computer equipment, known as cages.
Depending on the lessee (usually a company), a cage will have it's distinct, and often garish decorations. Tux (the linux penguin), for example, is awfully common, but always a welcome icon in most cages.
Other things like plasma balls, luminglasses, and other interesting things accompany the equipment in the cages contributing to (and usually making some sort of statement about) the geek corporate culture of the lessee.