In Shared Hosting, multiple websites are hosted on a single server i.e. the websites share the servers resources. This helps reduce the cost, since the cost of the server and its resources are spread across multiple packages hosted on the server.
Yes, Unlimited space is hereby subjected to Fair Usage Policy. It is meant to host your website. You can fill up the space with website files like HTML, CSS, JS, PHP, images etc. as much as needed. You cannot fill up the space with mp4, mp3, movies, heavy downloadable files, storage files like zip, tar.gz, games, software, backups etc. It is recommended to upload movies/videos/audio to YouTube or Google Drive and then hyperlink them on your website.