When hosts refer to "unlimited" bandwidth, they are simply stating that the amount of data transferred over a given unit of time is not restricted in the sense that you're limited to 20Gb per month, or whatever. It is obviously limited in terms of the physical connection that the server has to the internet but that is not what is in question here.
When people say that "unlimited bandwidth" is none existant, they're simply arguing semantics. There are other arguably more correct terms to use, but this one is most recognised as meaning that there is no limit per month (or day, week, whatever) enforced.
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