The concept of overselling usually applies to virtual servers. For the hosting provider it is profitable, but for regular clients, webmasters and other people who work with servers it is definitely not. To get to the heart of this concept, let's look at an example.
What is overselling
Suppose we have a dedicated server with 16GB of RAM.
Using virtualization, we can turn this server into a virtual hosting platform and spin up a certain number of VPS.
There are different ways to do this, using specialized software products such as OpenVZ, KVM, XEN, VMware and so on.
Some of them make so-called overselling possible.
The most popular virtualization system for overselling is OpenVZ.
So, back to our dedicated server with 16GB of RAM. It can host 16 VPS instances, each with 1GB of RAM.
With overselling, instead of 16 the hoster can create, say, 30 VPS, then sell them to clients, promising each one 1GB of memory.
What is the problem with overselling
The point is that all 30 clients will not consume their 1GB of memory at the same time: some use 500 MB, some 200, and some the full 1 GB. Such a system works fine until the moment when most users need the full power of their virtual server at the same time, at peak hours. At that point the server simply runs out of memory, and all the virtual servers start lagging badly and failing.
How to avoid overselling
To make sure your virtual server, and therefore your websites, always run fast and, most importantly, without failures, we recommend renting virtual servers from us, on virtualization systems where overselling is impossible: KVM and VMware.