When someone types in the address: www.yourdomain.com that name is translated into numbers (called an IP address) and then the computer is directed to that IP address which is the web site. Every web site on the internet is found not by its domain name but by its IP address.

You can reach a site by typing in the IP address alone and that will take you directly to the site. But note, not every single website has an IP address specifically allocated to it. For example, every single website on this server does not use different IP addresses.

So you might see jonswebsite.com and janeswebsite.com using the same IP address. Basically what happens is that when jonswebsite.com is resolved into the IP address, the person looking for jonswebsite.com arrives at the server; the server then realizes that the person is looking for jonswebsite.com and sends that page to the person requesting it.

Using more than one site on an IP address is called sharing IPs or a Shared IP address. If a site has its own IP address, and shares with no one else, it is called a Unique IP address.

You can always reach a site which has a unique IP address by using its IP address alone, but you can't reach a site using a shared IP address by typing in the IP address alone because when you type in a shared IP address you arrive at the server but the server doesn't know which site you want because you haven't told it which domain name you want.

One common reason for having a unique IP address is that you can only use SSL encryption on a unique IP address. In order for a person to transmit sensitive data over the internet at times this data must be encrypted to prevent someone from intercepting the information. You can only use this encryption (called SSL) when the web site has its own IP address (unique IP). It doesn't work on a shared IP.