Benefits of Virtualizing
Just like a physical computer, a virtual machine hosts its own guest operating system and applications, and has all the components found in a physical computer (motherboard, VGA card, network card controller, etc). As a result, virtual machines are completely compatible with all standard x86 operating systems, applications and device drivers, so you can use a virtual machine to run all the same software that you would run on a physical x86 computer.
While virtual machines can share the physical resources of a single computer, they remain completely isolated from each other as if they were separate physical machines. If, for example, there are four virtual machines on a single physical server and one of the virtual machines crashes, the other three virtual machines remain available. Isolation is an important reason why the availability and security of applications running in a virtual environment is far superior to applications running in a traditional, non-virtualized system.
A virtual machine is essentially a software container that bundles -- or encapsulates -- a complete set of virtual hardware resources, as well as an operating system and all its applications, inside a software package. Encapsulation makes virtual machines incredibly portable and easy to manage. For example, you can move and copy a virtual machine from one location to another just like any other software file, or save a virtual machine on any standard data storage medium, from a pocket-sized USB flash memory card to an enterprise storage area networks (SANs).
Virtual machines are completely independent from their underlying physical hardware. For example, you can configure a virtual machine with virtual components (i.e., CPU, network card, SCSI controller) that are completely different from the physical components that are present on the underlying hardware. Virtual machines on the same physical server can even run different kinds of operating systems (Windows, Linux, etc).
When coupled with the properties of encapsulation and compatibility, hardware independence gives you the freedom to move a virtual machine from one type of x86 computer to another, without making any changes to the device drivers, operating system or applications. Hardware independence also means that you can run a heterogeneous mixture of operating systems and applications on a single physical computer.