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Every business on internet requires a website and to publish a website one needs web space. There are many forms in which a web space is available and virtual hosting is one among them. Purchasing a web space is generally expensive and a big responsibility not worth affording for small businesses online. One requires a domain name and an exclusive IP address. A virtual host provides you web space which might be shared with other users like us. But there is no interference of one site in others as the domain name and IP addresses are separate.
The question that arises in every ones mind now is how is it possible? but it is true. Sharing a web space by different webmasters is a common practice today. What a hosting company does is buy a web space and create lots of IP addresses and domain names. They sell these domain names and IP addresses along with file storage space to different webmasters looking for web spaces and have low budget to work with. The virtual hosting is definitely much cheaper than buying individual web space and also much less headache of managing it.
When a user types a particular link they want to enter the message reaches the server and it identifies amongst the IP addresses that is required and then directs the server to the required IP. The time it takes to perform the task is not even noticed by the user.
A virtual host along with providing a web space might provide you other services as well like domain name registering, directory services for the files that web page is built from, designing a website service, email service etc.
The only limitation in virtual hosting is that a lot of users share the same web space and sometimes a large number of users are using the same server and there might be problem of sites using.
But still I will say using a shared/virtual server is much more beneficial where small businesses are concerned.

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