Is Overselling bandwidth is common in the web hosting industry?

Yes, Because more people use only a fraction of their allotted bandwidth per month.

Most web hosting providers price their plans knowing that most people will only use a fraction of the resources available to them. In fact, with most companies, if you did use the maximum bandwidth available to you each month, you would most likely be shut down.

If you go with a shared hosting account, your website can be hosted with hundreds or thousands of other websites. If your website starts to use a significant portion of the server’s resources, you may find them pulling the plug on your website.