Oversubscription, in a SAN (storage area network) switching environment, is the practice of connecting multiple devices to the same switch port to optimize switch use.
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In thin provisioning, a large amount of storage is set aside for an application, but storage is only released incrementally as additional capacity is needed. Since the application is given control of far more storage than it's actually able to use at the moment, that total storage capacity is said to be "oversubscribed" or "overbooked." This practice can tie up a considerable amount of storage long before it's ever really used, but it allows automatic allocation that can ease the management burden for storage administrators.
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Definition courtesy of WhatIs.com.