I would say it depends on the number of people at the party, the number of food restrictions that need to be accommodated, the difficulty/danger/price factor in providing appropriate food, and the pickiness of the restricted person.
In general, it's nice to provide alternatives for someone who has food restrictions when you host. But sometimes the combination of factors makes it unworkable.
I would say the larger the party, the less you can cater to individual restrictions, due to the sheer logistics of, for example, cooking food for 30 people that includes three parallel main courses. It also becomes harder to control the distribution at larger or less formal events, particularly if the substitute is seen as more appealing than the main offering - a common complaint of vegetarians at pizza events is when the veggie pizza is gone by the time they get to it, because non vegetarians like it too.
There's also the issue of successfully preparing food for people with dangerous reactions to common foods, or with very complicated rules. I know that I can't guarantee that food in my kitchen is 100% peanut free, for example, and I would not be able to prepare food for someone strictly kosher.
And I factor in pickiness, too. I'm generally happy to provide a vegetarian alternative. If one of my guests is a vegetarian who hates tofu and mushrooms, openly disdains meat substitutes, dislikes orange vegetables, and won't eat anything with sauce on it, then I'm not going out of my way to provide a vegetarian alternative that also caters to their other food quirks.
