There are some really good replies in this thread.

Here's an analogy that may further help your understanding of the concept of VPS: Think of VPS like a partition on your computer (ie. the D drive or the C drive or the F drive).

Now, reseller hosting and VPS are not necessarily mutually exclusive. It is possible to set up a reseller service on a VPS. Going back to my previous analogy, though, the individual hosting accounts under the reseller could be considered as individual folders/directories in a partition, rather than a separate partition on its own.

Hope that helps