VPS is acronym for Virtual Private Server. VPS is a virtual machine based on the resources of a bare metal server and providing you with many functionalities, similar to those offered by a dedicated server. You can usually find, in the same bare metal server, several VPS, each one provided with its own resources which are fully dedicated and separate.
If you own a VPS, you'll be provided with CPU, RAM, hard disks as for dedicated servers and the possibility to install any kind of operating system (the most popular are usually the ones with no graphic interface to save RAM).
The greatest advantages in choosing a VPS are bringing down the maintenance costs, scalability and flexibility of resources according to your needs at any time.