What is the difference between shared hosting and a VPS?
The short answer
With shared hosting you share a server with dozens of other websites. Cheap and worry-free, but with shared performance. A VPS is your own walled-off slice of a server with guaranteed capacity and full control, but then you manage the system yourself.
In detail
Shared hosting is the entry tier. The provider puts many customers on one server and handles maintenance itself. You get a control panel and nothing to worry about. The trade-off is shared capacity. A busy neighbor can theoretically slow your site down, although good providers contain that reasonably well these days.
A VPS (virtual private server) gives you a reserved share of a machine with fixed CPU and memory. You can install anything and you are nobody's neighbor. The flip side is that you are the administrator, so updates, security, and configuration are on you, unless you pay for a managed VPS.
The rule of thumb is that a normal website, blog, or small store belongs on shared hosting (or managed WordPress hosting). A VPS becomes relevant with custom software, high traffic, or when you are a developer who wants the keys. DigitalOcean and Hetzner are the go-to names there.