Most dedicated hosting packages from “standard” webhosts (GoDaddy/HostGator types) are pretty pricey, and I think with good reason, since you’re basically renting a remote computer, and service for same.
But… Isn’t what Digital Ocean (and others) provides essentially the same thing (once you install a LAMP or LEMP package which takes under a minute), for just $5 - $20 per month?
What am I missing here?
Consider Amazon Lightsail. 
It starts at $3.50 for Linux and they also have MySQL.
I don’t think you’re missing anything! Though it’s a bit DIY, something like Digital Ocean can save you a ton of money.
I would definitely recommend Digital Ocean over AWS because of my bad experiences with Amazon’s code.
Thanks, @HalGumbert. Pardon my French, but Fuck Amazon. I’d rather not give that company any more money or power than they already have.
Thanks, @Tim. So do you think once people figure this out, dedicated servers from hosting companies will disappear/get cheaper?
No, or they would have already. The hosting services you mention in your first post offer the convenience of having someone else maintain the server. Digital Ocean, AWS, and other DIY services require you do some googling to get up and running.
It’s a cost balance, some people prefer “the easy button” while others may prefer the pricing or control of a DIY provider.
Those are VIRTUAL machines, not dedicated servers.
Basically, that you are sharing a pool of servers (and its cost) with hundreds or even thousands of other users.
Thanks, all. It really seems that DO (and their competitors) are much cheaper than using a webhost, if you’re into rolling your own (as I plan to do).