There are two different types of hosting we are talking about here:
Type 1: Here is (a share of a server) with LAMP, here is cpanal, do what you like.
Type 2: We will install Moodle for you, and keep it running smoothly, and provide support.
Most hosting packages of type 2 will not let you just hack around with the code. You could screw things up badly, which is not consistent with them providing a guaranteed level of service.
That is, of course, an over-simplification, there is really a broad spectrum of options between these two extremes.
Hardware and performance
Internal hosting versus external hosting
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