Hi
This is more of an English term than an American one. It's a place you can rent to live in, and they are popular in places that are otherwise prohibitively expensive, like London, or off campus housing in a university town. It actually means Bed-Sitting room, which means you sleep in the same room as you live. Then American term is studio apartment.
Phil
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A bedsit is a form of rented accommodation consisting of a single room to be used as both a sitting room and a bedroom.