VPS provides more control than shared hosting but is cheaper than dedicated hosting. It works by dividing a physical server into multiple virtual servers. Cloud VPS improves on standard VPS by distributing data across multiple servers so if one goes down, data is available on another node, making it more reliable than single-server configurations. Cloud VPS is useful for data storage, media streaming, e-commerce, and large dynamic websites, as it has no upfront fees, scales easily, and removes the need to monitor hardware.