Virtual private servers bridge the gap between shared web hosting services and dedicated hosting services, giving independence from other customers of the VPS service in software terms but at less cost than a physical dedicated server. 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. Certain software does not run well in a virtualized environment, including firewalls, anti-virus clients, and indeed virtualizers themselves; some VPS providers place further restrictions, but they are generally lax compared to those in shared hosting environments. Due to the number of virtualization clients typically running on a single machine, a VPS generally has limited processor time, RAM, and disk space.
Due to their isolated nature, VPSs have become common sandboxes for possibly-insecure public services or update testing. For example, a single physical server might have two virtual private servers running: one hosting the production-level (live) website, and a second which houses a copy of it. When updates to crucial parts of software need to be made, they can be tested in the second VPS, allowing for detailed testing to be conducted without requiring several physical servers.
Virtual private servers are also sometimes employed as honeypots, allowing a machine to deliberately run software with known security flaws without endangering the rest of the server. Multiple honeypots can be quickly set up via VPSs in this fashion.
A growing number of companies offer virtual private server hosting, or virtual dedicated server hosting as an extension for Web hosting services. Some web hosting companies call a Virtual Private Server a Virtual Dedicated Server/Dynamic Dedicated Server or the other way around.