This custom is a practical one, preventing the trailing of mud and dust from the street (to say nothing of the by-product of those little dogs the Czechs are so fond of) into the house and the subsequent damage of the lovely softwood floors that you will find in many Czech houses. In some cases your host will wave their hand to indicate that taking off your shoes is not necessary, but it is only polite to offer. In order to facilitate this custom the Czech home will have a selection of slippers in various sizes to proffer to visitors and family.
Personally I find it a lovely custom and one I adopt in England. It is not just the practicality that appeals but of feeling at home and welcome that I like. The custom of wearing slippers indoors sometimes extends to environments other than the home, something that seems to be taking informality too far. I am told that a rule had to be passed prohibiting slipper-wearing by MPs during sessions of the Czech Parliament (or maybe the Czechs are just pulling my leg)!