Definition
A virtual machine (VM) is a computer emulated by a hypervisor on a physical machine, running its own operating system and virtual hardware, isolated from the host and from other VMs.
How it works
The hypervisor (for example KVM or Hyper-V) maps physical CPUs, memory, and disks into virtual resources and executes VM instructions with hardware-assisted virtualization. It is precisely these CPU extensions that let many VMs share one physical chip efficiently.
Usage
Cloud servers are, at bottom, VMs rented by the hour; developers use local VMs for isolated environments, and enterprises use them to consolidate servers and build disaster recovery and security sandboxes.
Related and confusable terms
A CPU is one of the core resources virtualized into each VM; in GPU virtualization, a physical GPU can likewise be partitioned into vGPUs shared by several VMs. Containers and VMs both isolate workloads, but containers share the host kernel while each VM runs a complete operating system.