VPS stands for Virtual Private Server and is a fully scalable solution to split (“partition”) a physical server into several “stand alone” units (like a hard drive) and these units can be dynamically adjusted after needs. This way you never have to lock yourself into a certain configuration and pay for more or less than you use or need. Having spikes in users or traffic between certain hours? Just scale up the server accordingly with processor speed, memory and resources. This way a super server built from top class hardware and with maximal specifications – that otherwise may be outside of many budgets and scope – could serve several clients at one, only charging them for the capacity they actually use (or may think they need).
This also allows for serval different OS (operating system) to be run at the same time on the same server, as each unit is unique. So you could have a VPS running Linux and another one running Windows, for example. Another benefit of this setup is that you can restart a VPS on the main server machine, without restarting the whole actual server. The opposite of a VPS is a dedicated server, which is a physical computer connected to the internet in a server hall.