Hosting on a dedicated server gives you complete control of the computer that is the web server. You can install any software you want, any operating system you want and you can allocate resources like memory and hard disk space however you want to divide it up between your sites.
The disadvantage of a dedicated server is that you are responsible for maintaining the server and sometimes even for the technical side of things. If you aren't familiar with the technical side of running a web server, you may need to choose a managed dedicated server, where the hosting company looks after these issues.
Dedicated server are, of course, more expensive than the other options, so unless your websites are well established, with a lot of traffic, they may not fit within your budget.
John Lenaghan writes about web hosting and other related topics for the Hosting Report website. For more information, visit http://www.hostingreport.org
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