Web Hosts usually installs many computer in the data centers powered by UPS backups. These computers are connected to the high speed internet by fiber optics connectivity And 99.9% uptime.So There are three level of hosting.

1. Shared Hosting (Virtual Hosting)
2. Dedicated Server Hosting
3. Server Co-Location Hosting

1. Shared Hosting (Virtual Hosting)  :: Servers are expensive so hosting service provider shares the sever space to host many sites on the same machine. So the one server servers many web sites. Usually on one server 1,000 web sites can be hosted. This makes web hosting affordable because you pay a portion of the server fee instead of the entire server. Over 95% of websites of the internet are hosted on shared hosting environment. ex way4host.com ...etc
2. Dedicated Server Hosting :: If you planning to host big application on the internet in that case you need a full server for running the application. In this case you are using the Dedicated Sever (server dedicated to your web site only) many hosting sites provide dedicated server. best hosting is low price end full technical suffort.

3. Server Co-Location Hosting :: In some cases you can buy your own sever and setup the applications according to your requirement and place the your server on some ISP with high speed internet connection. This is called Co-Location hosting.