You are probably are used to a computer being able to only run one instance of its operating system when you boot it up. The operating system is what controls and interacts with all the other software on your computer. It could be Windows, Linux, Apple’s iOS or another operating system typically referred to as the OS. Computers used by web hosting companies are capable of running multiple instances of the OS at the same time. So, if you have a virtual private server (VPS) on a host computer, such as one running a cheap Windows VPS, you can be in full control of that virtual computer.
This means that your operating system environment is isolated from others on the same computer who have a VPS. You can install software, change settings, delete software, run software and do anything you can normally do with a computer without having any influence on the other VPSs running on that computer. You never see nor have access to the other VPS clients on that computer even though you are all sharing a hard drive, CPU and other hardware that makes up the physical computer. It is because of the processing power of modern servers that this is possible.
This processing power makes it so the online host does not have to offer a dedicated computer for each client. Websites and businesses that need a dedicated server can have them, but they are much more expensive. A cheap Windows VPS makes it possible to have a budget computer server hosted by a provider where you can fully operate and control all aspects of the OS, and the actual computer where the VPS exists can have a bunch of customers on that single computer. A VPS is a way to have a business server without the cost of paying for a dedicated computer server to run your operating system online.