Virtual Private Servers (VPS) are powered by hypervisor technology, which allows multiple virtual machines to operate on a single physical server. The hypervisor sits between the hardware and the operating systems, facilitating resource allocation and managing the interactions between the virtual machines and the host server. By creating isolated environments, VPS can run different operating systems and applications independently while sharing underlying physical resources such as CPU, memory, and storage. This virtualization not only enhances efficiency and resource utilization but also provides clients with dedicated server-like performance at a lower cost compared to traditional dedicated servers.