A client asks the difference between Shared, VPS, and Dedicated servers ... and my partner goes: shared hosting is like having room mates in your apartment, VPS is owning the apartment, and Dedicated is owning the apartment building.
To most clients that is just good enough explanation. I would have ventured into OS installation, CPU, and memory sharing and that sort of stuff to explain the difference for the client - which in all honesty are rarely interesting to the clients.
It's like the 'elevator pitch' - if you can't explain what it is either you or your product does in a 15 second elevator ride it's too complicated. It's like tweeting, if you can say it in 140 characters or less it's probably easier to understand.