Lets try, very simply:
You can run multiple computers, on one computer.
Imagine multiple computers, then visualise 1 computer being able to do what all the others were able to (without thinking of the processing power).
With some depth:
Multiple "virtual" computers can be run from one physical computer.
In each virtual machine, you would see a BIOS screen booting the virtual computer.
So this means you could be running several operating systems (multiple Linux, WinXP) at the same time.
The concept of virtual machines also refers to the likes of the JVM (Java Virtual Machine) which is an environment in which applications are run which is separate from the rest of the operating system.