In shared hosting, multiple websites share the same physical server and its resources, which can lead to performance issues and limited customization options. VPS hosting offers a more stable and customizable environment, as each virtual server operates independently and has dedicated resources. Dedicated hosting, on the other hand, provides an entire physical server for a single user, offering even more resources and control than VPS hosting. However, dedicated hosting is generally more expensive and may require more technical expertise to manage and maintain.