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I'm no expert on this, but I believe it is because KVM is dedicated to each user, while OpenVZ can be oversold, and all the users share the resources.
OVZ has way less overhead since it's just a glorified jail and overselling is easy.
KVM can be over provisioned too, but it's more a matter of overhead since you need to fully virtualize the environment for each server.
Simply said, you can put more customers/load per server with OpenVZ than KVM.
You should also consider that for many reasons, OpenVZ shouldn't be considered production ready for many tasks, but this is a different matter.
Why Dedicated Server cost more than VPS?
Now you're just comparing apples to oranges.
2 major reasons.
KVM comes with higher overhead, which means it will use up more resource under exact same condition.
With KVM you have dedicated memory space, while in OpenVZ you share the memory. So it's possible that same software / libraries in different OpenVZ containers can share the same memory page, and thus save a lot on memory consumption. With KVM it's much harder to share memory pages, and thus waste more resource.
Oversold is not that important as you can always over commit your memory allocation in Linux (there is a kernel parameter that controls how to over allocate memory), no matter it's OpenVZ or KVM, or even on VMware ESXi.
Which type of VPS has higher disk and network IO overhead?
OVZ seems staying at Kernel 2.6 too long, not sure if docker is the next big things in container hosting.
With docker the goal is to automate deployment not to isolate you from your neighbors. Granted OVH tried to do it, but the beauty of Docker is having your containers work together not trying to secure them from interfering with each other or the host.
That's why I am not sure at this point yet. If docker will adopt more isolation, it may going to take over OVZ one day.
OVZ works fine for the most stuff you run, but as @Nyr said, its just a "Jail".
Some programs like Syncthing were able to crash the OVZ Node/ result in Kernel Panic.
As far as i know, the issue is now patched but that could happen with any other program also.
While Syncthing was running fine on KVM and Dedicated Servers.
Why taxi cost more than city bus?
With KVM, the provider is basically pricing it based on your "maximum" usage while with OVZ, the provider is pricing it based on your "average" usage. Unless you really need KVM for a specific reason, just go with OVZ from a provider that you know won't oversell to the point of there being problems. That way you're billed for average usage, but you can technically still use all your disk and RAM without the provider saying anything about it - because you'll just be part of the average.