In a nutshell (think pistachio), shared web hosting is a service that lets you host your websites on a web server with a whole bunch of other web sites. Your web site shares the web server's hardware and software. As long as your web site doesn't need all of the server's resources, this is the cheapest option for you because you are sharing the costs with many other people. Wikipedia answers the question of what is shared web hosting
by saying: "Each site "sits" on its own partition, or section/place on the server to keep it separate from other sites. This is generally the most economical option for hosting as many people share the overall cost of server maintenance."