Shared website hosting is hosting that puts many clients on a single server. Using this method, hosting companies are able to deliver extremely affordable hosting solutions to lower-traffic websites that cannot afford to operate a dedicated server.
Even though there are multiple clients on one server, clients are kept completely isolated from one another, so that they cannot access or manipulate data on another account. Server resources are shared, hence the term shared hosting, among all clients on the server. However, many hosts have measures in place to prevent a single client from consuming too many resources, and therefore slowing down other sites on the server.
We use the CloudLinux operating system on all our servers, which is based on the Linux CentOS flavor. CloudLinux provides an extremely reliable backbone for shared hosting customers in the sense that it very effectively throttles sites that consume a peak in resources (a bad script, for example), so that the one website does not bring down all the others. Once the CPU usage on the peaking website subsides, throttling is decreased and the website is able to function properly again. The advantages to this are that the account is not suspended like it would be on most hosts - the speed for that one site simply decreases. This way, the website that experienced the peak will not suffer any downtime as a result.
Shared hosting is best for individuals or businesses first starting out with their website, or for those who have relatively low bandwidth and disk space needs. Most of the time, a shared hosting account could easily accomodate up to about 10,000 unique monthly visitors. As the resource demands for a website increases, so will the hardware demands. After 'graduating' from shared hosting, webmasters have the choice to either put their server on a VPS or Dedicated server, which allocate far greater resources to that client but are also considerably more expensive.