A virtual private server (also referred to as virtual dedicated server or virtual server, and abbreviated VPS or VDS) is a method of partitioning one physical server computer into multiple servers that each has the appearance and capabilities of running on its own dedicated machine. Each virtual server can run its own full-fledged operating system, and each server can be independently rebooted.
With a virtual private server one can install their own operating system, reboot their own server, access server root, install almost any application as long as it is supported by the operating system you have chosen, run your own dedicated database or even a mail server and all these at the cost of a shared hosting account.
Sometimes called OS-level or shared OS virtualization, OS virtualization virtualizes servers on the operating system (kernel) layer. This method of virtualization creates isolated partitions, or virtual environments (VEs) on a single physical server and OS instance to utilize hardware, software, data center and management efforts with maximum efficiency.