The easiest way to explain what VPS hosting – or Virtual Private Server hosting – entails is to think of it simply as a server within a bigger server.
Root access, dedicated server resources, and isolated hosting environment
In VPS hosting, every website is hosted on a virtual private server on a more powerful hardware.
A physical machine is divided into several virtual compartments, and server software is set up on them separately, making each unit capable of functioning independently. Thus, though other websites may be hosted on the same physical system, yours would be the only website(s) hosted in the virtual compartment allocated (with independant server resources as CPU, RAM, disk space, etc) to you, and other websites on the machine won’t affect the performance of yours. That would mean you get exactly the same system resources you pay for.
It’s like each website residing in an isolated room with sufficient resources to live with.
You get complete root access to your server as if it were your dedicated server. But technically you are still on the same physical machine and sharing its CPU, RAM and bandwidth. VPS hosting gives you complete control over your server and almost the same benefits of the pricey dedicated server. This way, you can get a virtual dedicated server for a much cheaper price and get high performance for your website than a shared server.