A cloud server is primarily an Infrastructure as a Service (IaaS) based cloud service model. There are two types of cloud server: logical and physical. A cloud server is considered to be logical when it is delivered through server virtualization. In this delivery model, the physical server is logically distributed into two or more logical servers, each of which has a separate OS, user interface and apps, although they share physical components from the underlying physical server. 

I've observed or been a part of buying decisions for a few thousand server customers, from small-business owners getting a website online for the first time to established platforms with tens of millions of visits every day. While each of those purchasers had different requirements and priorities for a cloud server, a few key deciding factors were consistent across those decisions:
Cloud hosting's use of multiple servers gives it certain advantages over traditional hosting. For example, if your website experiences a sudden traffic spike, it can pull resources from another server to prevent slow page loads or, worse, the site going down. In addition, cloud hosting makes it incredibly simple for your to scale resources up or down, as needed.
Interserver VPS can be deployed from the West Cost (Los Angeles, CA) or east Cost (Secaucus, NJ) datacenters. Deploying your services from a location that is closer to you will reduce latency. Low latency service is important in some platforms such as stock trading. Or deploy in both locations to build redundancy into the service you are deploying.
Cloud hosting is an alternative to hosting websites on single servers (either dedicated or shared servers) and can be considered as an extension of the concept of clustered hosting where websites are hosted on multiple servers. With cloud hosting, however, the network of servers that are used is vast and often pulled from different data centres in different locations.
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