Web hosting is good for simple websites and sites with a few simple functions. In terms of management and maintenance costs. But there are limits and limitations. Storage space, traffic, available resources, etc.
Server hosting is essential for large sites, scalable sites, and content services. As mentioned above, all available resources that can be additionally processed in the server, such as storage space, traffic, and available resources, can be used.The downside is that it requires management and maintenance costs and maintenance skills, so you will need to hire a server manager or outsource the operation.
For example, if you are creating an extension service, it is not a good idea to do the basic work in hosting. If you want scalability, you have to start from scratch on the server to build on that foundation.
There are many other variables, but the general context is this~