In the early days of web hosting, running a web server was equivalent to actually installing web server software on a computer server in a data centre. This would mean that each web site would require a dedicated computer with the relevant software to run.
It soon became obvious that a more efficient system would be needed and one of the solutions to this problem was the idea of Shared Hosting.
Since a server would often run well below its’ capacity in order to serve a single website, many Web Server software companies started using the concept of shared hosting to use the available resources on the server and optimise the server usage. This is done by running more than a single website on a single server.
To achieve this, the web server software creates “virtual web servers” with each of them serving a different web site.
That would mean that several web sites can co-exist on a single hardware server and in turn this means (as the phrase “SHARED Hosting” would suggest) that all of these web sites will share the resources of this server.