The virtual machine running inside the physical host machine has its own operating system (OS) and behaves exactly as if it was running on its own hardware. Multiple virtual servers can run at the same time on a single physical server leading to reduced hardware costs and also lower energy bills due to lower power consumption.

The process was first used by IBM in the 1960s as a way to partition mainframe computers into separate virtual machines. These partitions allowed mainframes to run multiple applications and processes at the same time. Since mainframes were very expensive resources at the time, virtualisation allowed the most efficient use of the hardware.

Virtualisation can be used to take a snapshot of an old legacy machine and keep it running in the virtual world, far beyond the life expectancy of its original outdated hardware. This process can be used in cases where a legacy machine is still required for the functions of its software, but its hardware cannot be upgraded or migrated. Creating a virtual version on new server hardware allows it to continue to operate indefinitely when required.

The main advantages of virtualised systems are:

Multiple OS environments can co-exist on the same server (for example separate Windows and Linux virtual machines), sharing resources while remaining functionally separate. Multiple virtual servers can be spread over multiple physical servers to offer hardware "failover"; switching to a reserve server in the event of a failure.

No additional hardware required for multiple servers, so no maintenance and high availability.

Lower power consumption and lower costs, where multiple virtual machines can run on just one server.

Machines can be backed up like any other data and so can easily be restored or reset to their starting state if required.

Multiple virtual servers are easy to deploy for testing purposes or as a temporary server solution. Virtual machines are "sandboxed" meaning they cannot break out of their virtual world, which offers security benefits.