There are different types of web hosts available on the net. Choosing a suitable type of web hosting is essential for your website. Here are the major factors:
What type of scripting language do you want to use on the site, PHP, or ASP? For PHP sites, you need to go for Linux hosting; for ASP, what you need is a Windows host. Also you can refer to What’s the Difference Between Windows and Linux Hosting?
The most common web hosting types are: Shared Hosting, Reseller Hosting, VPS and Dedicated Server. After choosing the right type between Linux and Windows hosting, you need to choose from them. If you want to create a personal, or a small/medium commerical site, Shared hosting is your choice. In fact, about 80% websites are hosted on shared servers. For a larger site, what you need is a VPS. If your site will get large amount of visitors/traffic, you may need a Dedicated server.
If you want to setup your own webhosting business, what you need is Reseller hosting. Small web hosts are often resellers.