Why this matters for SEO and outreach
Sites on cheap shared hosting often share a single IP address with hundreds of unrelated domains. A reverse-IP lookup surfaces those neighbors, which is useful for two practical reasons: checking whether a shared IP has been used by spammy or blacklisted sites (which can occasionally affect deliverability or reputation signals), and finding a site's other properties when multiple domains happen to be hosted on the same server.
How the lookup actually works
Enter a domain name or an IP address directly, and this queries a reverse-IP data provider's index to find every other domain its records show pointing to that same IP. If you enter a domain rather than an IP, the domain is first resolved to its current IP address before the neighbor lookup runs against that address.
Why results reflect an index, not a live, exhaustive scan
Results depend entirely on what the data provider has already indexed from its own crawling and DNS records - a large host with thousands of tenants may not have every single domain captured in that index, so treat the count and list as a reasonable estimate rather than a guaranteed, exhaustive accounting of every domain on that server.
What to do with a long neighbor list
If you're vetting a hosting decision or checking your own site's company, skim the neighbor list for obviously spammy, adult, or clearly unrelated low-quality domains - a long list dominated by that kind of site is worth factoring into a decision about whether to move to a different host or a dedicated IP, even though shared hosting itself is not inherently penalized by search engines.