

So basically there is different modified versions of Minecraft for different purposes. Paper is specifically for hosting non-modded servers on lower end machines, but it changes some systems of Minecraft in undesirable ways, and only supports simple “plugins”. Fabric and Forge are the popular “mod loaders”, they are made to allow you to install mods to Minecraft, which includes mods like Lithium and Sodium that massively increase Minecraft’s performance.
with the right combination of performance enhancing mods you can increase Minecraft’s fps tenfold, without sacrificing any features or changing the gameplay. I run a massive custom modpack with tons of content and graphics mods, and it actually runs better than vanilla Minecraft because of the performance mods.
The performance mods I use for fabric are: Lithium, Sodium, Enhanced Block Entities, More culling, Ferrite Core, Immediately Fast, Modern Fix, Memory Leak Fix, Concurrent Chunk Management System, Noisium, Bad Optimizations, and Let Me Despawn.
There is plenty more performance mods out there that optimized more niche parts of the game, but these are the important ones (that I use). Lastly I don’t think a VPS is necessary because Minecraft servers can usually be run on even low end hardware, like a raspberry pi.
glad to help!, I thought I should mention real quick that if you decide to play around with mods that run on both the client and server side, Prism Launcher is by far the best way to manage modded instances of Minecraft. allowing you to easily download modpacks or create and export your own. I wouldn’t use the default launcher if you decide to use mods on the client.