You do not understand what it is that the unlimited hosting provider is actually offering.
With your hard drive analogy, the limited hosting provider is essentially splitting that 500 GB drive into separate partitions, each given out to a paying customer. The more partitions you have, the lower amount of space you can provide to each of your customers, as more sites on the same space = less space available per site.
Unlimited hosting removes the predetermined partitions, and instead offers up as much or as little space as each site requires.
Both services are unable to go beyond the 500 GB hard drive, as doing so is physically impossible. With unlimited, it simply implies that you are not restricted to a set amount of space determined by the provider, and can instead use the space freely without worry of going over a set limit, as quite simply, no limit exists. I like to refer to these predetermined quotas as being 'artificial limitations enforced by the provider', rather than physical limitations enforced by the hardware, as both the unlimited and the limited host will still be restricted by the available hardware at hand.
Does that make any sense? I'm not trying to start an argument, just hoping to clear some things up in terms that you may understand.