Virtualization is about better resource utilization, reliability, flexibility, and cost savings!
In the mid to late 90’s, as Microsoft Windows and other server technology developed, vendors like IBM and HP would release install tools to make it easier to get server software – typically Microsoft Windows – up and running on their hardware. This allowed administrators to easily install Windows Server products on HP Servers. With the use of these vendor tools, the installation would be seamless and easy. Almost too easy.
As a result, a server installed this way was "married" to the hardware on which it ran. If the server had a crash or failure, Windows had to be restored to the same or very similar hardware. The drivers were not generic enough to recognize any other hardware. For example, if an HP server crashed, you would need HP hardware: same build, same version, same generation, same release, same part...You get the idea. VMware and other vendors overcame this obstacle by releasing a "shell" that would act as hardware while actually being software. They then wrote generic drivers to emulate the hardware to Windows.
If you install VMware on server hardware first, it creates a "shell" into which you can install Windows or other operating systems. These operating systems use the VMware drivers to access hardware and VMware uses the vendor drivers. The operating system installation then becomes a set of files that is not married to the hardware. Instead, it is using VMware drivers that make the build portable to other servers running VMware.
Additionally, VMware servers can run more than one server at a time in their shell. You can have multiple virtual servers - or "Guests" in VMware terms - running on one physical machine - or "Host" in VMware terms. You are then able to copy a virtual server from one host to another, back them up easily, etc. This is possible because your server is now no longer a physical box but a collection of files running in a virtual shell.
Here is where the green comes in: Depending on the size, most server hardware runs between 200-400 Watts. If you have six physical servers, they are running at a potential total of 2400 watts of power. If these six servers are virtualized onto one server running at 400 watts of power, you just saved 2000 watts. You cut your power utilization by a whopping 83 percent. Never mind the other associated savings of smaller physical and heat footprint. You can have smaller server rooms, less climate control, and less hardware in landfills.
Here is where the money comes in: Admins like it because backup and recovery is much easier. For example, a technician can back up a virtual server running on an HP machine and start it up on an IBM machine. The backup can be saved to a file on a removable hard drive and taken off site. Disaster recovery can be done in a matter of hours rather than days. And all this is possible by simply reinstalling the VMWare shell on another box and moving my Virtual Server files over to it.