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There are two definitions for virtualization. One is outsourcing the data center, making it appear "virtually" local; this is the older one. The newer definition is hosting multiple virtual servers on one machine with a product like VMWare. IBM has just introduced a native virtual blade, which offers a speed boost above traditional blades. According to WhatIs.com:
Server virtualization is the masking of server resources (including the number and identity of individual physical servers, processors and operating systems) from server users. The intention is to spare the user from having to understand and manage complicated details of server resources while increasing resource sharing and utilization and maintaining the capacity to expand later.
There are lots of products that allow this to occur and allow you to manage the virtual machines easily. Virtualization also allows you to use resources that would otherwise do nothing much.
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