[Captain_McCusker]

The thing is, a dedicated server doesn't have to calculate quite as much as a server you're playing on. By running a seperate game, you're running less risk of lag due to fps issues, ram issues, or other issues that can cause your computer to become slow.

That's the best explanation I've got, anyhow. What you're suggesting about ded. servers being for larger servers - no. They're more common because the server's rented and on a larger pipe (speed). If you ran a non-ded server on a t-1, you'd still run the risk of lag if your fps drops too low, or whatever slows your computer.