Web Hosting Types

Free Hosting
Some ISPs offer free web hosting.
Free web hosting is best suited for small sites with low traffic, like personal sites. It is not recommended for high traffic or for real business. Technical support is often limited, and technical options are few.
Very often you cannot use your own domain name at a free site. You have to use a name provided by your host like http://www.freesite.com/users/~yourwebsite.html. This is hard to type, hard to remember, and not very professional.

Good:	Bad:
Low cost. It's free	No domain names
Good for family, hobby or personal sites	Few, limited, or no software options
Free email is often an option	Limited security options
	Limited or no database support
	Limited technical support

Shared (Virtual) Hosting
Shared hosting is very cost effective.
With shared hosting, your web site gets its own domain name, and is hosted on a powerful server along with maybe 100 other web sites.
Shared solutions often offer multiple software solutions like e-mail, database, and different editing options. Technical support tends to be good.

Good:	Bad:
Low cost. Cost is shared with others	Reduced security due to many sites on one server
Good for small business and average traffic	Restrictions on traffic volume
Multiple software options	Restricted database suppor
Own domain name	Restricted software support
Good support

Dedicated Hosting
With dedicated hosting, your web site is hosted on a dedicated server.
Dedicated hosting is the most expensive option. This option is best suited for large web sites with high traffic, and web sites that use special software.
You should expect dedicated hosting to be very powerful and secure, with almost unlimited software solutions.

Good:	Bad:
Good for large business	Expensive
Good for high traffic	Requires higher skills
Multiple domain names
Powerful email solutions
Powerful database support
Strong (unlimited) software support

Collocated Hosting
Collocation means "co-location". Collocated hosting lets you place your own web server on the premises (locations) of a service provider.
This is pretty much the same as running your own server in your own office, only that it is located at a place better designed for it.
Most likely an ISP will have dedicated resources like high-security against fire and vandalism, regulated backup power, dedicated Internet connections and more.

Good:	Bad:
High bandwidth	Expensive
High up-time	Requires higher skills
High security	Harder to configure and debug
Unlimited software options