A virtual machine operates within a physical computer by emulating a separate computer system through software. This technology allows multiple operating systems to run simultaneously on a single physical machine, providing isolated environments for various applications. It uses a hypervisor to allocate system resources, such as CPU power and memory, enabling each virtual machine to function as a distinct entity. This setup enhances resource utilization, supports testing and development, and improves disaster recovery strategies. Virtual machines are widely used in cloud computing and server management, granting organizations flexibility and scalability in their IT infrastructure.