A VPS or Virtual Private Server is a portion of a dedicated server which acts as if it were a dedicated server of its own. Using a VPS allows a user much more flexibility than they would have with a shared web hosting account at a lower price than that of a leased dedicated server. While different companies have slightly varying ideas of what the term "VPS" actually means, they almost all allow the user to have the privileged root account, which allows them to make significant changes in the configuration of the (virtual) server. For example, the user could install a non-traditional http web server, such as lighttpd, or a database server such as PostgreSQL.
While the VPS generally occupies a market niche between that of shared hosting and dedicated servers, there are a wide variety of VPSes, and their prices and capabilites span a wide range. The cheapest VPSes can be had for less than $10, while the more expensive VPSes can cost over $100. Pricing is generally an indication of processor power, disk storage, management, reliability and quality of network link.
There are several VPS platforms for use in hosting. Some are commercial, while others are open-sourced. The commercial VPS solutions have historically provided greater functionality and more features, to justify their price. Open source VPS software is growing in popularity and is becoming more feature-laden and sophisticated with time. Many low-end VPS providers turn to open source in order to keep their startup costs (and therefore, the prices that they can charge) as low as possible
Historically, VPS development depended on changes to the operating system in order to virtualize its hardware and resources. This meant that operating systems such as Linux (and other Unix-like OSes) were much more popular and available than competing operating systems. While the technical reasons for this may have changed due to the introduction of hardware virtualization from CPU vendors such as Intel and AMD, the net result is that VPS technology on Linux systems has had the benefit of such attention and most Windows VPS technologies have lagged in capability and popularity.