Virtualization is proven software technology that is rapidly transforming the IT landscape and fundamentality change the way people computer. Virtualization breaks the bond between hardware and operating systems. It allows you to run multiple software and operating systems on the same computer at the same time. Virtualization can help to increase hardware utilization, reducing capital expenses, energy consumption and operating costs while saving you money. Virtualization is a new technology and requires experience and expertise.
It's pooling a few resources to accomplish the same tasks you once did with many. To put it a different way think of a company with 6 servers, each in charge of a different task like email, storage, etc. Now instead of these servers being computers think of them as people, each person has a different job, one does marketing, one is in charge of mail, another might be the receptionist, either way; each individual has a task and does only that task. While it might be beneficial to have each person doing there own task, the allocation of work is going to be skewed. If for some reason hundreds of phone calls come in today and only the receptionist can answer the phone (their dedicated task), the receptionist is overworked. Meanwhile, the mail room person has a small amount of mail to sort, so they sit idle.
This is essentially how a company with a few servers works, each with their own set of tasks; none of which intersect. But the problem is, how do we fix the fact that the phone receptionist is doing too much work? Well, you could hire another person to help with the workload, but this is going to increase cost and if this spike in activity is only an once in a while thing then it wouldn't make much sense to keep a second person on hand at all times. The other problem is what about the employee that is underutilized? They still have a lot of potential tasks they could do, but are waiting for the instructions. This is the problem most companies faced before virtualization.
A virtual machine (VM) is a software computer that, like a physical computer, runs an operating system and applications. An operating system installed on a virtual machine is called a guest operating system. Because every virtual machine is an isolated computing environment, you can use virtual machines as desktops or workstation environments, as testing environments or to consolidate server applications. Virtual machines run on hosts. The same host can run many virtual machines.
This is a basic conceptional way to think about Virtualization. The practical way is:

 - Less hardware to manage.
 - More uptime, less down time.
 - Disaster Recovery is built in.
 - You can virtualize one server.
 - It is beneficial to almost any IT environment.
 - Less power consumption.
 - More flexibility.