Connect to the Internet using Network Address Translation (private subnets) – Private subnets can be used for instances that you do not want to be directly addressable from the Internet. Instances in a private subnet can access the Internet without exposing their private IP address by routing their traffic through a Network Address Translation (NAT) gateway in a public subnet.
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f. In a few minutes, the Instance State column on your instance will change to "running" and a Public IP address will be shown. You can refresh these Instance State columns by pressing the refresh button on the right just above the table. Copy the Public IP address of your AWS instance, so you can use it when we connect to the instance using SSH in Step 4.
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So that could be either a virtual machine - an operating system running inside another operating system, or a virtual private server - you rent a virtual server from a company, so you have your own internet-facing server running 24/7 relatively cheap (since it's not a real server, but one of many virtual server running on an actual server). I think he might have meant the later, since you'd have to run a snartnofe (btw I love that name) non stop to benefit from it.
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Partitioning a single server to appear as multiple servers has been increasingly common on microcomputers since the launch of VMware ESX Server in 2001. The physical server typically runs a hypervisor which is tasked with creating, releasing, and managing the resources of "guest" operating systems, or virtual machines. These guest operating systems are allocated a share of resources of the physical server, typically in a manner in which the guest is not aware of any other physical resources save for those allocated to it by the hypervisor. As a VPS runs its own copy of its operating system, customers have superuser-level access to that operating system instance, and can install almost any software that runs on the OS; however, due to the number of virtualization clients typically running on a single machine, a VPS generally has limited processor time, RAM, and disk space.