Your short question has a very long answer. web hosting is a service that will lease you space to place a web server in a small area of their facility, you are responsible for all maintenance and upkeep as you will own the equipment, most of the services (ISP or Internet Service Provider) will also place your web pages on a server that they own and maintain, the fee for this is much smaller than leasing space and buying equipment. You want you to be able to handle a lot of traffic so you need to select an ISP that is a NAP (Network Access Provider) rather than a POP (Point of Presence). the NAP normally has access to all of the major Internet carrier circuits and is a point where all of the Internet traffic comes together, they normally have very large bandwidth to the Internet, normally OC-48 (1.2 gigabits per second) to the Internet and upto OC-192 (9.6 gigabits per second) and also provide multiple routes on to the network. A POP normally will have links to a NAP at speeds ranging from multiple T-1 connections (1.54 mega bits per second) up to OC-3 (150 mega bits per second) and ocassionally OC-12 (600 megabits per second).
Your server will probably have a 100 mega bit per second connection so the larger your connection on to the Interenet the faster your access and higher the number of connections you will be able to handle.
Once you have selected your location, you need to obtain a domain name (yahoo.com) register that domain name and pay a small fee.
Now you have a location and a domain name, you need to either create your own web page or hire someone to create it for you, your web page will need to have a shopping cart so people can select the items they wish to purchase, a checkout counter so they can pay, you will now need to get a company to accept your customers credit cards and deposit the money into your account, you may also wish to accept PayPal, all of this needs to be in place before you can sell a single item.
The web site, if sitting at a NAP will cost you about $2500 per month ( I would check around for pricing, try AT&T, Qwest, Verizon etc..), the domain name is cheap $35 per year (or less depending upon where you register). Web page design costs will vary depending upon the number of pages and other options, you will need to get a quote for some one so look in your yellowpages.
So now you have invested all of this money in getting the ISP web page design, domain name and also a credit card clearing house and you have yet to sell a single item. This as it turns out is the MAJOR obstacle, how do you advertise your business? You can pay to have ads place on yahoo or google as well as other seach engines, you can do ad exchanges where you place an ad for a web site and they display an ad for your web site. It is tough to get people to your site and until they do you can't sell anything and your expenses go on.
I can hear you saying OMG, so I am going to make a suggestion or two that will help you get started.
Open a website at the first link below, startup costs are pretty affordable $40 per month + $50 setup fee, already has the shopping cart and credit card broker, the site is fully maintained by Yahoo and the starter site is for a business that expects to make upto $12,000 per month. If you sold $10,000 worth of merchandise your cost of your site and credit card transactions would total about $190. The domain name will
cost you $9.95 per year
You can also do the same thing at EBAY also at pretty affordable prices (see second link).
Your 3rd option is to simply list your items on EBAY, you can list your items, the listing costs are cheap and you pay a very small fee based on the selling price of each item
The reasons that I recommend a Yahoo Store or Ebay Store is that they already have a ton of traffic, which is the main objective in getting people to see your products.
Actually there is nothing to prevent you from opening a store
at each site and maximize your exposure.
I told you it would be long and I hope that I have helped shed some light on this subject.