Overselling is a big trend in the web-hosting world at the moment. It's an easy way to get more out of your servers than normally is possible. The basic idea of overselling is that the majority of your clients are only going to use a fraction of the resources allocated to them so there's going to be a lot of wasted bandwidth and space. Overselling involves taking a gamble and selling more than you can handle assuming that the unused resources will cover it.
Let's say for example that a server hard drive is 80GB and has 1200GB of bandwidth. The hosting company has a look around and decides that to be competitive they need to offer plans with 2GB of disk space and 40GB bandwidth. With these figures they can only offer 30 hosting packages per server. This leaves quite a bit of wasted disk space and after a few months the company will probably notice that their users aren't using all of the available bandwidth. Because of this the company then assumes that it can safely sell at least 10 more packages on the one server. If the original number of customers already covers general costs then the extra packages provided by overselling are pure profit.