Shared web hosting is what most people mean when they refer to "web hosting". It simply means that many customers websites reside on a single web server, and that the server's resources (processor, hard disk and memory) are shared among every customer account on the machine.
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Application development using cloud-based resources, is typically a change for the good. For instance, the results of the Evans Data Cloud Development Survey, conducted in December of 2012, found that cloud platforms reduce overall development time by an average of 11.6%. The trend is actually getting better. Most enterprises I speak with, who chose to migrate specific applications to the cloud, are happy with the results.