Shared web hosting is pretty much what it reads. Shared web hosting is = sharing web hosting or just splitting a web server into smaller pieces that are shared. When you order shared web hosting, depending on what kind of resources come with your web hosting package. The shared web hosting you will be getting will probably be at the bottom of the totem pole.
Typical shared web hosting packages
The typical shared web hosting plan will feature not a lot of CPU or memory resources with your plan. The amount of resources for CPU and memory will vary from web host to web host but they will not be much when compared to higher end plans, a VPS, or a dedicated server.
Another resource that will be limited would be your database connections. If your MySQL/MariaDB/PostgreSQL database has too many concurrent connections then it will result in your web hosting getting either temporarily suspended or all your sites will slow down dramatically. The more resources dedicated to your web hosting plan = the more concurrent connections you can have.
Limits with shared web hosting
The resources that are limited when you order shared web hosting includes: CPU processing power, PHP memory limit, amount of memory (RAM), preset maximum number of emails sent per hour, and database connections. Each of these resources would typically increase whenever you upgrade your web hosting plan. When you make the switch to a VPS or dedicated server these resources will be plentiful and not as restricted.
A lot of neighbors
When you order shared web hosting you will be having hundreds to thousands of neighbors (other people like you that are using the same server). When you upgrade your shared web hosting plan to a more expensive one. You decrease the number of neighbors that share your server with you. When you use a lot resources and upgrade to a VPS or dedicated server. The number of neighbors you will have will be less then 100 if not a handful.