Unlimited websites and domains means you can host unlimited number of .com/net/org or other domain names. However, in shared hosting terms, you will more than likely be limited by :
Storage Space, Bandwidth, CPU/RAM/Disk I/O limits. So it's not as though you can host unlimited domains, in reality, you can host as many websites as you can before you hit these limits.
If all your websites are static websites ( basic HTML sites ), you can probably host 100s of them, but if you have several Wordpress sites, depending on traffic, you may host only a few before running into limit errors, and be asked by your host to upgrade to a bigger plan/VPS/Dedicated Server