Web Hosting is the actual term for the process of hosting one or more website. Now it's categorized under a few categories.
A) Shared Hosting: Regularly this is cheap as many others share the resources of the box (PC). You can adjust many settings as you are not in full control.
B) Premium Shared Hosting: This is a little more expensive and allows you to have a unique IP address and even SSL to run a store.
C) Reseller: Here is almost freedom from shared, while you have tools to sell hosting your self.
D) VPS (Virtual Private Server): This could be managed or unmanage. A VPS gives control of the box, no other person is in your virtual enviroment, while you share the main box resouces, it works on a different level. You can have multiple IP's, and SSL's.
E) Dedicated Server: A full blown computer all for your self. Very expensive. This is recommended if you are selling the services or running large scales web sites.
F) Cloud Servers: A cheaper version of a dedicated server. Unless you are running a high scale website or website where you need to scale resources up and down as needed this is really something you should not be thinking of. But pretty much you can have a dedicated server for MySQl, four dedictaed to balance the apache process and so on.
Hope this describes all the stages for you. Stay away from GoDaddy hosting. If you are looking for a quality VPS you will be spending about $40 a month ServInt, HostGator and a few others are great. Stay away from 1&1 and other trash hosting that in order to give you access to SSH you need to send a drivers license and stuff.
