In simple words Virtual Private Servers are like housing apartments. Each apartment has same feature but it is occupied by different persons, like that Virtual Private Server is divided into different servers with same resources but used by different web sites. In virtual private server hosting each virtual server is allocated with defined dedicated resources which can only be used by that VPS. Main physical node has total RAM of more than 4GB. Suppose this node is divided into 16 virtual servers. Each virtual server can get approximately 256MB of RAM and equal share of CPU resources. Amount of resources can be allocated differently for each virtual server. Number of maximum virtual servers a physical node can contain depends on the total available resources in it. Each VPS runs independently, each one has its own file system so that other VPS cannot interfere into their system. So VPS gets almost all features like a physical Dedicated Server.

In virtual private hosting environment, first, the physical server node boots with operating systems (OS) like Windows Server or Linux Server. After the physical server node boots up, it runs virtualization application which boots each virtual server within virtualization environment. Virtual servers does not get direct access to the hardware of the server and these servers are booted through the disk image. There are 2 kinds of virtualization environments: software based and hardware based. In a software based virtualization environment, the virtual machines share the same kernel (kernel is central module of any operating system. It is a module of operating system that loads first, and it remains in main memory) and actually require the main node's resources. This type of virtualization normally has many benefits in a web hosting environment because of quota incrementing and decrementing in real time with no need to restart the node. Example for software based virtualization environment are Virtuozzo and HyperVM. Microsoft Virtual Server, VMware ESX Server and Xen provides hardware based virtualization environment. In hardware virtualization environment, real hardware resources and no burst and/or realtime quota modification is possible.