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Virtual hosting is a method for hosting multiple domain names (with separate handling of each name) on a single server (or pool of servers). This allows one server to share its resources, such as memory and processor cycles, without requiring all services provided to use the same host name. The term virtual hosting is usually used in reference to web servers but the principles carry over to other internet services.

There are two main types of virtual web hosting, name based and IP based. Name based virtual hosting uses the host name presented by the client. This saves IP addresses and the associated administrative overhead but the protocol being served must supply the host name at an appropriate point. IP based virtual web hosting uses a separate IP address for each host name and it can be performed with any protocol but requires a dedicated IP address per domain name served. Port based virtual hosting is also possible in principle but is rarely used in practice because it is unfriendly to users.

Name based and IP based virtual hosting can be combined, a server may have multiple IP address and serve multiple names on some or all of those IP addresses.

Virtual web hosting allows many websites to be hosted on the same server(s), leading to competitive pricing for the end user and for simplified management for all parties involved. Without the efficiency of virtual web hosting, it would be impossible for the Internet to scale as the hardware and maintenance costs would be unrealistic for the vast majority of website owners.

For large websites with a significant number of visitors and page views, virtual web hosting may not be the best solution because the resources required by the website can be very significant, often resulting in the need for an entire server, or for very large sites, multiple servers. However, virtual web hosting benefits entry level users with small websites who have a low budget and only require basic server resources that can be shared with other sites.

Basic virtual web hosting plans should incorporate the following features; adequate disk space and bandwidth, email accounts and an administration control panel. The control panel has multiple features simplifying the process of web design and management for regular folks who are not tech savvy. The control panel will allow for easy installation and administration of popular web software like WordPress, Google Analytics, forum software, etc. The operations for each domain name remains independent from other domains hosted on the same virtual web hosting server. Administration of the domain's resources is conducted on the server side via a web browser interface.

With virtual web hosting, the user only has access to the portion of the server where their website(s) reside. For instance, users can upload photos to their blog or post articles and HTML files. However they are not granted rights to conduct processes like increasing disk space or bandwidth, as those details are controlled by the hosting package that the user has purchased. Most virtual web hosting packages also allow for administration of advanced services such as MySQL databases or PHP.

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