Most website do not require a strong isolation of a Xen instance and they are largely static and thus cache-friendly. Yet, Erlang on Xen has something to offer to websites too.
A website based on Erlang on Xen can generate content dynamically for every visitor and avoid excessive caching. Caching inevitably leads to data inconsistencies that may not be tolerated by a website. Think about casting votes or an auction bidding.
The website can be packaged really neat. All your content and logic is baked into a single image. The image is dormant if there are no visitors. As many instances as needed are spawned on the fly when visitors start to pour in.
Another nicety of the approach is better security. Many a time a blog gets hacked as soon it reaches popularity. Not so with Erlang on Xen. The absence of the traditional operating system makes it a tough nut to crack.