Intro to Virtualization
Basically, virtualization is using a software package to create an environment that allows you to emulate multiple instances of hardware on a single server. You will hear terms like Hypervisor and Paravirtualization, but the important concept to grasp is that to the guest software- the hosted virtual machine- the environment atop which it is running appears to be a dedicated piece of hardware with it's own CPU(s), Memory and disks. Not only does this allow you to consolidate physical hardware and run multiple virtual servers on a single piece of hardware (saving space, expense, hydro etc.), but you can mix and match operating systems, move virtual machines between hosts, and do many other useful and interesting tasks.
Three of the major players in this market space are VMWare with their ESX and ESXi products (now called vSphere), Citrix XenServer and Microsoft VirtualServer. All these vendors offer perfectly functional free versions of this software which makes getting into virtualization very easy. To keep things simple, most of this article will be referring to VMWare and ESX.