What is a Virtual Server
A virtual server is very similar to having your own dedicated server but at lower cost. The difference between a virtual server and dedicated server is the way the hardware is used. When you have a dedicated server you have an operating system installed on 1 physical machine and you have access to the full resources of this machine - they are "dedicated" to your programs.
A virtual server is a separate isolated "guest" operating system installed upon an existing "host" operating system. The VPS (virtual private server) shares the resources available to the host and any othe virtual servers that may be installed on the host machine.
Each of the virtual servers installed on the host have limits imposed on them, such as processor usage, memory usage and file usage. The guest machine is usually a very powerful machine with lots of processor cores and memory so that it can be fairly shared between the VPS's
Performance is rarely an issue with todays computing technology as the capability of multicore processors and abundant memory makes it easy to share the resources between virtual machines.