A Cloud VPS is an emulation of a computer, also known as a virtual private server, that lives within a parent server and shares resources with other virtual servers. A Dedicated Server is a stand-alone, physical server that does not share resources. As with fixed resources, scarcity can lead to less than optimal performance for the resource-intensive application, which is why Dedicated Servers often outperform VPS instances.
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.