Virtual Private Servers (VPS for short) are a kind of halfway house between shared hosting and dedicated servers. They offer key features like root server access and your own dedicated chunk of server resources which you would normally associate with dedicated servers, but at a fraction of the price. So, how do we manage that?
We use trusted virtualisation software to divide servers into slices, each of which has sole access to a portion of the server's memory, disk space and traffic allowance. Although the hardware is shared, the virtualisation software allows you to use your VPS hosting as you'd use a dedicated server.
There are fewer customers on a VPS server than there are on a shared server, so we're able to provide each customer with a much greater share of resources - making it ideal for larger sites. But because there is more than one customer on each server, you get to share the costs - keeping the accountants happy.
Think of it as the difference between buying a house and buying a flat. If you buy a house, you've easy access to the whole house, plus the garden – but it'll cost you. If you get a flat in the same area, you may have fewer rooms, a shared front door and limited garden access, but you'll still have plenty of secure private space of your own and all other things being equal it will be cheaper than the house.