Bandwidth is the amount of data your hosting account is allowed to send/receive per billing period. Bandwidth is used when a visitor access your website, if you upload/download files, stream videos etc. The bigger your website is the more bandwidth you will use. You should also look into services such as cloudflare which serve a cached version of static files from their own servers which will reduce your bandwidth usage.
Unlimited is primarily for marketing, the provider doesn't usually set a limit or sent a very high limit which would leave you to believe that you are getting unlimited however they will still have an Acceptable Usage Policy, if you use too much they will probably need you to upgrade / move your account.