I wrote an article about this called Shared Hosting is Bad for Business. I pointed out that shared hosting as a business model depends on the failure of it's customers' websites. You can't run 1,000 high traffic websites on a single server, typically, but you can run 1,000 no-traffic websites on a single server.

You see this in practice because basically every shared hosting provider will disable your account if your website starts using more than it's quota of system resources.

Some providers go so far as to say their service is unlimited but obviously that's false, there are several physical limitations no matter what hardware is being utilized.