Your website resides on the internet, server to be exact. So, it makes sense if I tell you web hosting is measured by the disk space you occupy on that server and the bandwidth since you and your visitors continuously need to interact with each other. Visitors may interact in the form of accessing your content while you interact with them by providing that content in the first place. There is no as such ideal disk space or bandwidth which generally incorporates all kind of traffic on the websites, it varies according to individual requirements. If your interaction with visitors is primarily in the form of written text you might not need huge bandwidth, similarly if volume of your website visitors does not exceed a certain number in a certain time you might as well do not require large disk space too.
So basically, web hosting is getting a virtual space through a host service provider that allows anyone to place their website on the internet and the cost of that space is determined on the amount of space you are getting and of course the bandwidth you require.
Before paying for any web hosting service you need to make sure it does not only fulfill your needs, but it is also cost effective and provides a very responsive technical support. If you want to learn more about web hosting features and checklist, this website.com article might be useful for you.