A shared hosting account is when many websites sit on the same physical computer together at a web hosting company.  This allows for cheaper prices for everyone involved because the cost of maintaining the server can be shared by everyone with a website on that particular server.

There are obviously both advantages and disadvantages to this.

Advantages

Cheap: Shared plans are typically the cheapest plans offered by hosting providers; as little as $4.95 or so per month.

Easy to setup: All they have to do is add your account to the server, and you're generally up and running within minutes to hours at the most.

Good for low volume: If you only have a text-only website, and aren't going to be having an exceptionally large amount of users, there really isn't much reason for you to spend money on a dedicated server.

Disadvantages

Who should use shared hosting?