What is virtual hosting?

Virtual hosting is essentially "shared web hosting". Virtual hosting is a method that webservers use to host more than one domain name on the same host. It is generally the most economical option for hosting as many people share the overall cost of server maintenance.

There are two basic methods of accomplishing virtual hosting:
name-based, and IP address or ip-based.

In name-based virtual hosting, also called shared IP hosting, the virtual hosts serve multiple host names on a single machine with a single IP address.
With web browsers that support HTTP/1.1 (as almost all do today), upon connecting to a webserver, the browser sends the URL to the server. The server can use this information to determine which web site to show the user. So each website would have a DNS entry and all the DNS entries for the websites point to the same IP address.

In IP-based virtual hosting, also called dedicated IP hosting, each webserver has a different IP address. The webserver is configured with multiple physical network interfaces, or virtual network interfaces on the same physical interface. The webserver uses the IP address from the HTTP request to determine which web site to show the user.

Disadvantages of virtual hosting:
Older web browsers that only support HTTP/1.0 will not work because they do not send the URL.
If the Domain Name System (DNS) is not properly functioning, it becomes much harder to access a virtually-hosted website.
They do not support secure websites (HTTPS), at least not on the same TCP port. All virtual hosts on a single HTTPS webserver must share the same digital certificate. Because the SSL handshake takes place before the expected hostname is sent to the server, the server doesn't know which encryption key to use when the connection is made.