"In computing, virtualization is a broad term that refers to the abstraction of computer resources. One useful definition is "a technique for hiding the physical characteristics of computing resources from the way in which other systems, applications, or end users interact with those resources. This includes making a single physical resource (such as a server, an operating system, an application, or storage device) appear to function as multiple logical resources; or it can include making multiple physical resources (such as storage devices or servers) appear as a single logical resource."
wikipedia
Virtualization technology is critical, but not just for consolidation; it also offers a way to mirror production systems for disaster recovery. In Gartner's view, Virtualization is now into its 2.0 version, as software vendors begin to ship their software in virtual machines with the operating system and needed middleware. This approach avoids the "deleterious effects of one piece of software on another,"
Computerworld
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