Disk space is the amount of data allocated to a specific client. For instance, if a client is allocated 2GB (2,000MB) of disk space, then he or she could store up to 2,000 1MB pictures on that server.
When calculating disk space usage, it is usually the combination of all the files saved on the server, plus databases and email space.
If a client exceeds their disk space limit then one of two things will happen depending on your hosting plan...
1) You will not be able to upload additional files and or receive new emails.
2) You will be able to exceed your limits but you may receive an overage bill on the last day of the month.
It is important to remember that you have the ability to control certain limits within your hosting plan. You may have settings that limit the disk space usage in certain areas to less than your plan limit. For example, if an email account exceeds its disk limit then you look at the control panel first to make sure you don't have a limit specified on that account.