The acronym 'VPS' stands for Virtual Private Server in web hosting. A VPS is a virtualized server dedicated to a single user or organization. It operates within a physical server but functions independently, providing users with greater control over their hosting environment compared to shared hosting. With a VPS, users can customize their server settings, install applications, and manage resources more effectively. This option is popular among businesses that require dedicated resources, enhanced performance, and enhanced security without the cost of a dedicated server.