Shared Hosting This is like an apartment.
VPS Hosting This is like owning a town home
Dedicated Hosting This is owning a house on the internet
Most people start out with Shared website hosting. In a shared website hosting environment the host puts a large number of users on a single server. By large number I mean over 1,000 users. These websites are your neighbors. If a website has faulty code it puts all the websites at risk. Shared is also the cheapest hosting environment and is seen as the starter hosting.
If your site is larger or has a good amount of traffic, a Virtual Private Server is a better option. A VPS is still a shared environment, but the way it is shared is very different. These are usually limited to 10-20 sites or neighbors. These plans are larger as well. You get more RAM and more processing power for your website.
Dedicated Hosting. This is a good option if your site is getting 100k visitors a month. Not only do you need resources for website performance, you need the bandwidth to handle all the visitors. It’s like you get a computer all on your own, many companies allow you to customize it extensively. You may be able to choose the amount and type of memory, the OS to install, and other hardware elements that make up a computer. The down side is you need a server administrator to help manage and set it all up. These are mostly for larger custom websites with a good amount of traffic.