A Virtual Private Server (VPS) is a type of hosting service that allows users to have their own dedicated portion of a physical server. It operates in a virtual environment, meaning multiple VPS instances can run on a single server, each with its own operating system and resources. This setup provides more control and flexibility compared to shared hosting, where resources are shared among multiple users. VPS hosting is ideal for businesses or individuals who need more power and customization than shared hosting can offer, but do not require the full resources of a dedicated server. It is commonly used for websites, applications, and databases that demand higher performance and reliability.