What It Is
Strictly speaking, bandwidth is the capacity of a connection: how much data can travel through it at one time, like the width of a highway. Hosting companies often use the word loosely to mean data transfer, the total amount of data your site sends visitors in a month. Every page view, image, video and download adds to that total, like the number of cars that drive the highway over a month.
Why It Matters for Your Business
Most small-business sites use far less data than typical plans allow. Problems appear when a site hosts large files, such as videos or big PDF menus and catalogs, or gets a sudden surge of traffic. A restaurant whose site goes viral with a large uncompressed video on the homepage could hit a limit and see the site slowed, suspended or charged overage fees.
Good to Know
Reduce the data your site uses by compressing images, hosting videos on a platform like YouTube or Vimeo and embedding them, and using a CDN. Plans marketed as "unlimited bandwidth" still have fair-use rules, so read the terms. If you expect a big promotion or press coverage, let your host know ahead of time.