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If it's the case, then no "unlimited" bandwidth/disk storage for them:

Here are some specific examples of things not allowed:

Making your account resources available (whether for free or pay) to the general public.

Coralrift.com is a simple Rails app but we changed the Apache configuration to route all subdomains to individual directories served by Apache.

We had to get a VPS instead of hosting on something like Heroku because we needed access to the filesystem and Apache configuration

I would guess they have a VPS. A VPS with Dreamhost allows you to do wildcard DNS, so I'm guessing they're doing something along those lines.

Yes, we have a VPS with root access