In short, a virtual machine (VM) is a complete virtual PC.
You'll need software for it the most popular ones are
VMWare Workstation and
Microsoft's Virtual PC. With this programs you can create virtual systems which run inside of your regular Windows. So you can launch these virtual PC's in a window, boot them up and install almost any OS you wish on it. You can reboot a VM and install and use software... It's kinda like a remote desktop connection, but then connected to a virtual PC which is stored in a file on your system.
It's great for testing software. You can let a VM crash completely, your normal system will keep on working
. Install spyware, viruses and all... it won't harm your regular system and you can just restore you VM at anytime. I use VMware for betatesting Messenger Plus!, this way i can test on Windows 98 all the way up to Longhorn if i wish, on a single PC, without formatting it
.
/ 
