What is the scale-up Or scale-out HANA configuration ?

As the amount of data in a database system grows, the system’s hardware needs to be upgraded to accommodate the added data volume/workload.

There are two options available in SAP HANA : Scale-Up Or Scale-Out.
SAP HANA Scale-Up and Scale-out system

Scale-up - This means increasing the size of one physical machine by increasing the amount of resources(RAM/CPU) available for processing.

Scale-out- This means combining multiple independent nodes/computers into one system.

Technology has constraints on the CPU/memory configuration , that means there is a limitation on the amount of memory can be addressed by CPU cores.

Please note : At the time of writing this article , SoH(Suit on HANA systems , eg ECC , CRM , SCM etc) can only be scaled-up , and the maximum of 12 TB of RAM is certified. There is no scale-out option for SoH.

For rest of the business use cases(For example BW on HANA or Data marts) we can go with either Scale-Up or Scale-Out. In this case the maximum for Scale up and Scale Out can be 3TB/node.(4TB/node is under approval processing).

Below information is gathered from here.
HANA Hardware options for Scale-up and Scale-out

One can find the HANA Hardware Certified vendor list along with their product offering at  : http://global.sap.com

A scaled out HANA system looks like following in the HANA Studio. Below shown system is an 7 (6 Worker + 1 Standby) node system.
Click to enlarge image - SAP HANA Scaled Out System View