VPS hosting is a type of hosting that partitions a physical server into multiple virtual servers. Each virtual server has its own operating system and software, providing more control than shared hosting. VPS hosting offers advantages like being cheaper than dedicated hosting while providing better features and control than shared hosting. It allows for custom administration, isolation of websites, backup capabilities, and migration between physical servers. However, VPS hosting also has some disadvantages like potential hardware limitations from resource sharing, full responsibility for software and security updates, and possible risks of sites being grouped on the same IP address.