I haven’t heard the term before, but I do know of one local private day school that has this host family system. Maybe it’s because we are in a rural area, where it’s not so easy to get into even minor trouble without getting noticed (i.e. before it can escalate), but such activity has not been a problem.
What I have observed, in the school with host families and in another nearby with small (5-10 student) dorm-style houses with houseparents, is that the students don’t really integrate with their fellow students. Their experience is vastly different from that of students at boarding schools.