"What is UNLIMITED DISK Space"

As many webmasters who have been burnt can attest, "unlimited" in web hosting lingo usually does not really mean "unlimited" when it applies to disk space and bandwidth. While the rest of a web host's feature list is usually written in English, this word is best understood as being written to fool you around.

According to a prominent web host, account holders are given "unlimited disk space". On this host, if you look at the fine print, you will find that "you can add as much content as you want, but maybe not all at once" (unmodified quote given). In other words, you can't use the "unlimited" space in one go. You can use an unspecified amount at first, and then add more. But who gets to decide how much you can use each time? The web host, of course.
This is confirmed by their next sentence, "The vast majority of our customers' sites grow at rates well within our rules, however, and will not be impacted by this constraint" (emphasis mine). Specifically what these rules are, that is, how many MB you can use at first, at what rate you can increase your disk space, is not stated. In other words, the web host has managed to entice you to host with them without even specifying how much disk space you can use.
When web hosts provide "unlimited" space, they often have to restrict what what you can use the disk space for. They need to do this since if every user really uses their "unlimited" space, the host would have to spend an unlimited amount of money to buy an unlimited number of hard disks to provide space for them.

As such, if you look at the Terms of Service (TOS) agreements of web hosts providing either unlimited space or incredibly huge amounts of disk space (such as those providing hundreds of gigabytes or even thousands), you will notice that you cannot use the space for any purpose you choose. In most cases, their condition is that the space can be used only for the website. You cannot, for example, use the space as a sort of Offsite Backup space for your home or office computer.

Web hosts that specify a realistic amount of disk space for each customer usually don't need such restrictions. Sometimes you can see this advertised as "unrestricted disk space" or the like, meaning you can use the disk space you are allocated in any way you wish.