Over sold reseller (or shared) web hosting is exactly as its name implies. In the same way that airlines will sometimes over book flights knowing that there will be some cancellations and no shows, many web hosting providers also over sell web hosting.
As an example, lets say we have a server PC with 200Gb hard disk space to share amoungst the reseller web hosting clients. Lets further assume we have a 50Gb reseller web hosting package. Logic would dictate that we can have 4 reseller accounts on this server, right? Wrong! Many web hosting providers will over sell their reseller hosting accounts, so they might actually sell 8 or more packages to resellers.
In the same way that airlines bank on the fact that there are cancellations and no shows, hosting providers will count on the fact that when the resellers sell, for example, 100Mb to their clients, on average their clients will only use 10 or 20 megs, so on average, over selling reseller hosting will not actually cause disk space to run out.
Does PHP-Web-Host.com over sell its reseller hosting?
NO WAY! Even though over selling can work, because, as explained, on average, most end users will use far less than what they've been allocated, we don't want to EVER over sell reseller (or shared) hosting for 1 simple reason. The resources (notably RAM) on the server is then split amongst more and more web sites. So, lets assume on our theoretical 200Gb server, we have 4 reseller web hosts and they each have 10 clients. That's 40 websites on the server and things will run smoothly and quickly.
Lets assume a competitor also has a 200Gb hosting server BUT, they over sell, so they sell to 10 web hosting resellers, who each have 10 clients. This results in 100 websites on the server, as opposed to our 40.