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Heroku virtualizes dynos with linux container (lxc) [1]. The good thing is that lxc is very lightweight because it shares the host's kernel, so dynos aren't slowed by another virtualization abstraction in addition to ec2 xen. The bad thing for heroku users is that memory does not need to provisioned upfront for dynos, so spikes in memory usage of neighboring dynos can eat up all the memory in a physical machine.

[1] https://devcenter.heroku.com/articles/dyno-isolation

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