Shared hosting is a bit like communal living; essentially, you lease part of the server and share the resources: CPU (processors), memory and disk space, bandwidth, etc. with the other users. This works well for most smaller websites as the speed, storage, bandwidth and reliability you need usually function without a problem. However, for businesses with bigger requirements, the resources available can be too limited.
There are some potential issues with shared hosting: if some of the other websites sharing the server hog resources it can impact on your site’s performance and if they leave themselves vulnerable to infections or hacks, this may compromise your own security.
If shared hosting can be likened to lots of people sharing a big house, VPS is the equivalent of dividing the big house into a number of smaller flats. Each VPS is a separate computing environment, isolated from the others, with its own dedicated resources. Being a separate entity with its own operating system means your data won’t be compromised by other customers’ vulnerabilities. It also means you can run any custom apps.
Continuing with the house analogy, having a dedicated server is the equivalent of owning the entire house. You have all the disk space and computing resources at your disposal and control over which operating system and hardware you want to use, however, this does make it the most expensive choice and is best suited for businesses that have larger processing and storage needs.