There are many possible reasons. These centers offer significant “benefits of scale,” that is, they offer large amounts of power, space, and data infrastructure that many companies can access for a much lower price than if they tried to develop corresponding resources by themselves. A colocation center is a sort of pooling of resources. The data infrastructure, especially, allows greater bandwidth capacity, meaning a company’s website should operate more smoothly and efficiently.
In a shared server arrangement, you share the server resources with other websites that are all hosted on a single server. This is less expensive than virtually all other paid options, but it does raise a concern in regards to the performance of your own site operating sluggishly because a neighboring site has a spike in traffic or a poor coding issue and is currently hogging a high percentage of the servers resources.
Or if your host turns out to be a “reseller,” i.e. someone who doesn’t actually own the server but has leased it to you from the actual owner, you could end up in a situation where they have to take any tech support request to the original owner. This might cause delays that could be disastrous for your business.
If you’re getting your website hosted for free, though, chances are that your visitors will see those ads placed by the hosting company. Whether the advertisements are relatively unobtrusive or really blaring and annoying is going to vary from host to host.
This too, will be something you need to look into.