VPS hosting provides a cost effective solution that bridges the gaps between shared hosting and dedicated servers. With VPS hosting, a physical server is partitioned into virtual servers that each act like a separate dedicated server. This allows for improved performance and stability compared to shared hosting. Some key advantages of VPS hosting include flexibility, compatibility with common programming languages like PHP and MySQL, a wide selection of database options, strong security, and high speed and stability. Linux and Windows are both popular operating system options that provide advantages for VPS hosting, such as growth and customization options for Linux, and support for ASP, ASP.NET, and Microsoft databases for Windows.