The putting out system was a precursor to the factories of the Industrial Revolution. It was an intermediate step that came between the system in which everything was made at home and the system in which everything was made in factories.
In the putting out system, a central agent -- an owner or employer type -- would buy materials and then give them out to various people to work on. For example, an agent might go around giving thread to women in a village. The women would weave the thread into cloth. The agent would come around, gather the cloth, and pay the women for doing the work.