There are two key sorts of web hosting: dedicated hosting, and shared hosting.

Dedicated Hosting

Dedicated hosting means a whole server will be dedicated to your website by your hosting company. This is expensive, but a must for well-established, traffic-heavy sites. Basically, all of the bandwidth (the amount of data your site can transfer) and the storage (the hard disk space) of that server will be yours. For most small or medium sized businesses, and for individuals, dedicated hosting is unnecessary.

Shared Hosting

If you opt for shared hosting, you will share a server with other customers of your hosting company. You will have a monthly limit on bandwidth, storage, email accounts and so on. If you choose badly, you may find that your website is slowed down at peak times by traffic to the other sites on the server.

It is possible to get free shared hosting, like that offered by Geocities, or some ISPs. In general, this hosting is extremely limited and looks unprofessional. Paid hosting is not massively expensive, and often the host will offer free setup and a domain name when you buy hosting from them. It is worth paying for a good host: be picky, and make sure you use a large and well-established hosting company with a good online reputation.