Why is it not advisable to have the database and web server on the same machine?

Question

Listening to Scott Hanselman\'s interview with the Stack Overflow team (part 1 and 2), he was adamant that the SQL server and application server should be on separate machin

Answer 1

Database licences are not cheep and are often charged per CPU, therefore by separating out your web-servers you can reduce the cost of your database licences.

E.g if you have 1 server doing both web and database that contains 8 CPUs you will have to pay for an 8 cpu licence. However if you have two servers each with 4 CPUs and runs the database on one server you will only have to pay for a 4 cpu licences