Karaoke (カラオケ) means "empty orchestra": kara, empty, and oke, a clipped form of the English word orchestra. The music is there and the singer is missing, and you are the missing part. It was invented in Japan in the early 1970s and has since travelled almost everywhere, though usually in a different form from the original.
The room, not the stage
Outside Japan, karaoke usually means singing in front of a bar full of strangers. In Japan it almost never does. People go to a karaoke box, a building of small private rooms rented by the hour, and sing only in front of the people they came with. A phone on the wall orders drinks and food, the machine keeps a running queue of everyone's picks, and a screen counts down the minutes you have left. This is why karaoke works socially in Japan for people who would never sing in public: the audience is already your friends.
What it is for
Karaoke is a standard second stop after dinner and drinks, especially for work colleagues, and it does a specific job. An evening out with the team is one of the few settings where the usual formality relaxes, and singing badly in front of your boss is part of how that happens. Everyone is expected to have an ohako, a signature song they always fall back on. Going alone is common enough to have its own name, hitori karaoke, and some chains sell it as a service: a small room, a good microphone, and nobody listening at all.
Words & idioms to take away
Idioms & proverbs to carry away
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十八番 (ohako): your signature song, the one you always sing. The word comes from kabuki, where it meant a family's eighteen best-known plays.
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一人カラオケ (hitori karaoke): "karaoke alone," going by yourself to sing with no audience, common enough that venues advertise for it.