What is Shared Web Hosting
Shared Hosting Means Running More than one Website on a Single Machine, With each Website has its own Domain Name.
How Shared Hosting Work?
If the Server Running more than one Website then it is called as a Shared Web Server. Today All the Web Servers Support Running Multiple website on a Single Machine. This generally is Done by using the Concept Called Virtual Host.
About Virtual Host
Virtual Host Allow Server to Run more than One Web site on the server. You Can Think Virtual Host as a Container where information about each Website been kept. Also, each will have a separate VirtualHost.
Following is the Example of how Virtual Host is configured in Apache HTTP server.
As per the above Example ServerName is the Domain name of the Web Site. When the Server receives a request for the example1.com it will serve the content inside the /var/www/example1. If the server receives a request for the example2.com it will serve the content of the ./var/www/example2 directory.
Can Traffic of a another Website Effect to Your Website?
Yes it is Possible since all Website uses the same resources inside the single Machine, performance of one website could effect to another. But Having Said that Modern Shared Hosting Servers Use high end, high performance Computers so they can easily handle more than a few websites. May be Hundreds.
Should I Go with Shared Web Hosting.
It is Depends on How Critical and How much Traffic Your website is getting right now. At the Beginning you Should go with shared hosting and when your business grows and attracting lots of traffic, then you should move to the next level.
What is the Next Level?
A Shared Server may not be enough for your business when number of Visitors getting increased. Because More Visitors mean more resources are going to need. So You Can Decide to go to the next level, That is, moving your website to a VPS (Virtual Private Server). Or For a Dedicated Server if necessary.
Who Provides Shared Hosting.
Almost All web hosting Companies provide shared hosting features For Very Cheap Prices. And Most Web Hosting Companies use Software Called cPanel to Manage their Shared Web Serves.
With cPanel Software, Hosting Providers also provides GUI (Graphical User Interface) For their customers, so they can easily manage their own Website without having to know anything about Server Administration.