Our VPS hosting envionments function in the same manner. While we have one physical server, we can run several different virtualized operating systems on that one server. Each virtualized operating system acts as if it was a dedicated server.
This allows you to have all of the benefits of a dedicated server at a fraction of the cost. VPS hosting is a Virtual Private Server, and is a virtualized server. A VPS hosting environment mimics a dedicated server within a shared hosting environment.
VPS Hosting is one of several types of web hosting accounts you can choose from to host your website online.