Hi,
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.
You could download a demo of VMware if you're still not sure.
http://www.vmware.com
VMware can boot from an existing disk, or you can create a virtual disk and install a new operating system on it to get a better grasp of the idea.
Hope that helps