Prior to Passenger, Rails was mostly deployed using Apache or nginx with either a built-in or standalone proxy (like HAProxy) against a cluster of Mongrels or Unicorns. This setup still works great, but it's more complicated to setup and administrate than using Passenger.
JRuby on Rails
JRuby brings Rails to the Java Virtual Machine. This means that you can deploy Rails applications on app servers like Glassfish or Jetty. You can use Warbler to package your Rails application as a standard WAR. Great for slipping into the enterprise.
Capistrano brings deployment automation to Rails whether you're working with a single server or on a cluster of dozens. It was extracted from the 37signals tool chain (like Rails) by core alumni Jamis Buck.
While Rails hosting is now common place, there's a handful of dedicated Rails hosting companies that have been around for a long time and supporting the community: Rails Machine, Joyent, Brightbox, Planet Argon, Engine Yard, and Heroku. If you're just looking for a VPS, we recommend Rackspace (who gracefully donated slices for us to run Rails infrastructure on) or Linode.