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A lot of hosts oversell greatly to try to entice people who haven't had much experience with web hosting to go with them. It is basic human nature to go with the cheapest plan offering the most space. If you don't really know much about hosting, or haven't researched the company, you are more likely to use an overselling host.
However, as has been said before, overselling can be good if done correctly. Most hosts that oversell space and bandwidth ridiculously I would suggest avoiding, as they will have other limitations, such as only allowing you to use 0.1% of the server's CPU time, or all your files must be directly incorporated with your site, or other such things that you are unable to check but they can use to suspend your account.
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