Grid or Cloud Hosting, is the newest hosting solution and is popular with web 2.0 websites and services (software as a Service aka SaaS). Cloud hosting combines features of distributed computing, peer-to-peer and virtualization to offer an on-demand computing via a network of computers (grid) working as one.
One major advantage of Cloud/grid hosting is its ability to scale, just by adding more hardware (servers) to the "grid", which it means that theoretically grid hosting can resolve many challenges associated with online services that have massive demands/users.
Cloud Hosting is an enterprise-class of web hosting which demands high availability and performance of the website/web srvices. Hence cloud hosting is suitable for applications such as SaaS (Software as a Service), Web2.0 services, Virtual datacenter.