A virtual machine (virtual computer, virtual server or virtual PC) is a computer that exists only virtually. You cannot see a virtual machine as a separate physical computer.
It is a computer created using some software like Microsoft Virtual Server 2005, Microsoft Virtual PC 2004 or something else. Each virtual machine and all the software installed within it (including operating system) is stored as a single file within your host computer's hard disk. You can copy, rename or move this file to any other computer, take backups etc.
You can use Virtual Server 2005 software to create and manage virtual machines. When you create a new virtual machine using Virtual Server 2005, you have to specify the following:
1. Memory available for the virtual machine (It will take the specified amount of memory from host computer. So, if your host computer has 1 GB memory and if you specify 512 MB memory for virtual machine, then when the virtual machine starts, the host computer will have only remaining 512 MB memory available)
2. Hard disk space. You can space some default space like 20 GB for the virtual machine. This space will be taken from the host computer, but will not be really used until you use that much space within the virtual machine. The host computer will still have the space available for it until the virtual machine actually occupy the space.
3. Hard disk location - The virtual machine hard disk is stored as a single file within the host computer's hard disk. So, you have to specify a location to save it. You can copy this file to other computers or take backups so that you can restore a virtual machine any time.
To see and access a virtual machine, you must login to your virtual machine software. Inside this software, it will show you a list of virtual machines created using that software. You can select a virtual machine you already created and start it. When you start a virtual machine, it will start just like a separate computer. If you have already formatted the (virtual) hard disk and installed any software, it will boot the virtual computer and show the operating system you installed. You can use it just like any other computer.
When you start a virtual machine first time, you have to partition the hard disk, format it and install the operating system. All this is done within the software and nothing will happen to your host computer and it's hard disk.
When you shutdown a virtual machine, only the virtual machine shuts down, not your host computer. On your virtual machine, you can install any software you want, take backup of entire virtual machine as single file in a CD or DVD or format the hard disk whenever you want.
Virtual machines have access to all hardware devices on your host computer except the memory and hard disk. When you create virtual machines, it gets it's own portion of the hard disk and memory from host computer and cannot directly access host computer's memory or hard disk.