A Virtual Private Server (VPS) is a simulation of hardware by a host operating system that allows another operating system to run on it. What that means for Web developers is that a Web hosting company can host multiple “Virtual” servers on one physical, or “host”, server.
Each virtual server is isolated from the others (or “Private”), and access to hardware resources (RAM, CPU, Disk Space, Network throughput) is managed by the “host” server. So, for instance, a server may have 48GB RAM, 2000GB of disk space, and 2 x 2GHz processors, with 10 VPSes on it. Depending on the VPS software that’s used on the host machine, each VPS can either share hardware resources, or have guaranteed access to 2048MB RAM, a disk space limit of 100GB, and an effective CPU of 1GHz.