Hello Scott,
When you upload a zipped shapefile to your ArcGIS Online account, you are sharing the files so other can download and open the files in desktop applications. If your particular ArcGIS Online user account has permissions to publish a hosted feature layer, you will be asked if you would like to also publish the zipped shapefile as a hosted feature layer. The zipped shapefile will allow users to download the data contained within it , while the hosted feature will "web enable" feature layers from the shapefile.
Add items—ArcGIS Online Help | ArcGIS
Publish hosted feature layers—ArcGIS Online Help | ArcGIS
Best,
Megan