What exactly is web hosting? - In a nutshell, web hosting is a like a folder or directory on your computer, except it's on a computer that's connected to the Web 24 hours a day, 7 days a week. And, anyone on the web can read what you put in it. To use a web host, you put your files in your space on the web host. Visitors can find your files by going to your web address (called a URL.) When a visitor makes a request to your URL, a web server "hears" that request and gets the files from the disk where your website lives, and shows them to the visitor. If you want to create a simple web page, or build a massive web store like Amazon's, you need web hosting. You build your pages using a web language like HTML, build your scripts (programs) using a server language like PERL or C#, and then you upload everything to your web host, tweak some values for your scripts (if you have scripts) and voila... your live. (That's a very, very simplified answer.)
Mostly used web hosting type:
Shared hosting is always the least expensive. It is generally aimed at beginners and intermediate users (though if your specific application doesn't require CGI or database access advanced users can save tons of money with shared hosting). As the name implies, Shared hosting is "sharing" the hosting environment. Usually your web site lives in a folder along side many other folks web sites, and the same web server process serves up all of the those sites on request. This means any site in a shared that acts as a bandwidth hog will take CPU and disk access time away from other neighboring sites in the environment. Many shared hosting providers work to mitigate these circumstances by controlling the bandwidth, file sizes and overall resource usage available to any one site. Upgrades in a shared hosting generally consist of making additional bandwidth, file size and CGI access available... basically allowing you to take up a higher priority among your neighbors. All in all this is a very good balance of cost versus performance.