Overselling is a technique that involves offering high amounts of disk space and bandwidth for extremely low prices. You generally see this from extremely large, well established hosts, or small kiddies looking to gain an edge on the competition.

Overselling can be very beneficial if done in moderation in a smart manner, but without proper application, it can result it overcrowded, slow servers along with many angry customers.

The central idea of overselling is that the clients will never use the amount of space they offer, but by offering it you look great.

Another thing I figured out is that hosts that oversell at this magnitude have restrictions on CPU usages on a per-account basis that prohibits you from using your allocated resources. If you use the amount of space they give you, youll be using too much CPU power and will be forced to either stop using so much or upgrade to a dedicated server.