VPS stands for virtual personal server. A physical server is housed in a data center, the location of which depends upon the hosting provider you’re using. A VPS is a portioned part of one of these servers that contains it’s own operating system, bandwidth, and disc space.
These physical servers will generally be divided into multiple different VPS, dedicated, or shared servers. A VPS will be used like a dedicated server, and can be customized to the liking of the user.
Most shared servers come with an existing hosting environment and certain settings already built-in. A VPS acts like a dedicated server without the cost of having a dedicated server. Plus, they can be customized to your liking, if you have the technical chops.