Even though you are sharing one physical server with other users, a VPS simulates a dedicated server hosting environment. Your hosting provider installs a hypervisor—a virtual layer—on top of the operating system (OS) of the physical server that divides it into virtual compartments. This layer enables each of these compartments to run its own OS and software, allowing each environment to function independently from one another. 

Even though you are technically sharing resources with other users, your resources are guaranteed. You pay for a defined amount, which is allocated to your VPS and cannot be used by another account. 

• Shared hosting is when multiple users share a single physical server and all of its resources. However, you are not allocated a set amount of resources, meaning your website’s computing power and memory can be affected by the needs of other users.
• Dedicated hosting, on the hand, provides an entire physical server and all of its resources are reserved for your business alone. You get full control over everything, from hardware to operating system to custom server software.
• VPS hosting sits at the midpoint between shared hosting and dedicated hosting. Unlike shared hosting, you get a defined amount of resources allocated to your VPS. Plus, you can enjoy many advantages of dedicated hosting for a more affordable price, including your own OS, server applications, and root access control.  

Let’s use an analogy to help break down the differences between a VPS and a dedicated server: 

Think of a VPS server like reserving a private room at a restaurant to celebrate an event like your birthday. Instead of eating at a table in the main restaurant with other patrons (shared server), you can enjoy a separate dining experience in a private space that can be customized to your needs. 

You get all the seats, tables, dishes, and cutlery necessary for your guests and can arrange them how you want. You can request a different menu or drink special that your guests can order according to their tastes. However, you share the kitchen, staff, and other amenities with other patrons. 

A dedicated server is like renting out an entire venue and hiring a catering and event company. You have complete control over every aspect of your party and all the resources will be reserved just for your group of guests, but it will also be very expensive.