Vitualization is a process that allows one operating system (the host) to run a full version of another operating system (the guest) within itself. Unlike emulation, where the host must also simulate the hardware, virtualization allows the guest to interface directly with the system’s hardware. As such, virtualization requires both the host and guest operating systems to use the same system architecture (i.e. you cannot have an x86 host and a PowerPC guest).
For desktop versions of Microsoft Windows, the official virtualization tool is called Virtual PC. For servers, Microsoft has a tool called Hyper-V, which is a hypervisor virtualization application. Hyper-V comes as a standalone complete virtualization package or bundled with Windows Server 2008 R2.
Supported guest operating systems include: Windows Server 2008, Windows Server 2003, Windows 7, Windows Vista, SUSE Linux Enterprise Server (10 and 11), and Red Hat Enterprise Linux – RHEL (5.2, 5.3, 5.4, and 5.5). For most of these OSes, Hyper-V will virtualize both x86 and x86_64 operating systems. Hyper-V itself, however, runs on 64-bit servers.
Virtualization has many uses, from testing operating systems to running full virtual private servers within greater server systems. It also allows the server administrator to run a completely different operating system from the host OS, where it would have otherwise required a separate server. A good example is to run a Linux distribution on a Windows server. You can also run several guest operating systems simultaneous on one host server.
Hyper-V may support other guest operating systems in addition to the ones listed, but Microsoft only officially supports those listed on their website.