Dedicated hosts (single-tenant)
A dedicated customer wants a server all to themselves -- no other tenant's workloads on the same box. Some buy it for isolation, some for compliance, some just for peace of mind. Whatever the reason, the promise is simple: this machine is theirs and theirs alone.
You give them a private server by dedicating a free host to them: hand a whole machine to that one customer, and the engine keeps everyone else off it. Until you do, their workload has nowhere valid to land and you'll get told they need a private server. Unlike the guaranteed-CPU pool, this isn't automatic -- you decide which machine to hand over, so you can pick one you can spare.
A dedicated customer OWNS the box; an uncontended customer only owns their cores on a shared box. Don't satisfy a guaranteed-CPU (uncontended) contract by giving that tenant a private server -- that's overkill and wastes a whole machine on a promise the shared 1:1 pool already keeps. Dedicated is about tenancy (who else is on the machine); uncontended is about CPU (who can borrow your cores).
Detailed explanation
requires_dedicated_hosts is a TENANCY guarantee: the customer's workloads must land only on hosts whose admit scope is this-customer-only -- a private host no other tenant shares. You provide it with the existing dedicate machinery (dedicate a free host to the customer's segment); an OPEN host repels any workload a live filter matches, so dedicating hosts to the tenant auto-confines its VMs onto them and keeps others off.
Unlike the shared uncontended pool, dedicated capacity is NOT auto-expanded -- the engine never folds a dedicated tenant into the shared pool. When no private host is available it raises CustomerUnservable / NeedsDedicatedHosts: dedicate a free host to this customer (the diagnosis can suggest one). Distinct from requires_uncontended (1:1 CPU on a SHARED pool) and anti_affinity_required (spread replicas across distinct hosts). A dedicated host is usually also uncontended because you own its cores, but the distinguishing requirement is tenancy, not the CPU dial.