The primary host or the real hosts sell their services to the resellers and then resellers sell the space to the site owners. Resellers purchase a huge bulk of space from the real host and resell them to their customers with some more services like web programming, web designing, management services etc.
Reselling is only to increase their sale. As there are many reseller hosting companies who provide different packages, so in order to remain in competition, hosting companies sell their services to resellers.
Under this reseller web hosting, the primary host or the real host are able to make huge business and can deal with every individual client through resellers.
Here the services offered by the intermediary host do not differ from the real provider in fact they may provide some extra services like web designing, management services to their customers which a real host can not offer.