U is the standard unit of measurement for rack-mounted equipment. Racks can be used to house servers, hard drives, switches, routers, and other computer hardware. They are also used for mounting audio and video equipment. Standard racks are 24 inches wide, but vary in height. For this reason, the U unit measures how tall a rack-mountable hardware device is.
1U is equal to 1.75 inches. Therefore, a 1U piece of equipment is 1.75 inches tall and takes up one unit of rack space. A 2U device is 3.5 inches tall and takes up 2 units of rack space. Racks themselves are also measured in U. For example, a 10U rack could store 10 1U devices or 5 2U devices. It could also store 3 3U devices, with just enough space left over for your miniature Star Wars action figure.