Firstly it's important that we discuss what web hosting is in order to fully understand what the different plans offer. In layman's terms, when you put a website online, you need space on a server to place the files that are then accessible via the world wide web. This is called "hosting a website".
The easiest way to host a website is to use a company that rents out space on a server for you to place the files. Here are the types of plans they will offer.
Shared Hosting Plans: Shared hosting plans are the cheapest and most basic plans that are available from a web hosting service online. "Shared" means that you share space on a server with other people. For most people with a small website, or multiple small websites, this is a perfect solution.
A good hosting company will offer the ability to host unlimited domains, use unlimited bandwidth and use unlimited disk space for a low monthly fee. Fees are usually under $10 per month.
Dedicated Hosting Plans: If you or your company has a vast database, or a massive amount of files, or maybe it has a large amount of traffic, you might want to upgrade to a "dedicated hosting plan". This means you have the full use of a server to yourself, without sharing with anyone else.
Many people will upgrade to a dedicated hosting plan if they want to more secure a website. Perhaps they are getting hundreds of thousands of visitors a month and they don't want to risk another person on a "shared" server getting the IP address of the server blacklisted because of spamming, which is not a normal thing, but has been known to happen once or twice.
With having your own server, you have more security. There are no strangers to you putting files on the server, only you and your company.
Reseller Hosting Plans: A "Reseller" hosting plan is a completely different concept that can be used in a couple different ways. The idea of the Reseller plan is you pay a monthly fee for a block of disk space and a block of bandwidth.
This block of disk space and bandwidth can be segmented into separate accounts with separate control panels controlling them. This means you could create and manage your own hosting company. You would charge a monthly fee and allow people to access their own control panel that you set up through your own master control panel.
Many internet marketers use Reseller hosting plans to manage a large amount of sites. In this case, the person has a separate account with separate control panel created for each website. The beauty of this is that often times the different websites are set up on different IP addresses, which completely separates the sites.
There's a quick rundown of shared vs. dedicated vs. reseller hosting plans. Each have their benefits depending on your needs.