I shiver at the thought of explaining my business to my non puter savey relatives. I end up telling them that we hosts are just Virtual Real Estate agents and we lease out space in our "Virtual Apartment buildings". Each building has so many apartments, and each apartment is a website.
The size and cost of your apartment depends on how much space and apartment resources you need. If you only need a very small apartment, then the cost is much less than someone needing a large apartment.
They usually just end up politely nodding and smiling, thinking I'm running some kind of scam.