Oversubscription makes good technical and financial sense. Switch ports can be expensive and dedicating ports one-on-one is not the best use of switch ports and their available bandwidth. Fanning multiple devices into a single port can improve that port's utilization. This saves money and reduces the total number of switch ports that need to be configured or maximizes the use of available ports.
But there's also a downside. Multiple devices connected to the same switch port may contend for that port's bandwidth, resulting in poor response time. When considering oversubscription, it's important to understand the bandwidth, I/O and response times demanded by each storage device. Storage devices or applications that require high bandwidth and high storage service levels should generally connect with a switch port 1-on-1. It's also easier to manage port allocation on a one-on-one basis.
Oversubscription is a slightly different concept in storage provisioning. 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.