Patitioning your hardisk too is a virtualisation.Did you know it?There's a common misconcept that virtualisation is something new. It completely wrong. Virtualisation is quite old. In fact much older than personal computers.
Virtualisation is the concept where resources like cpu , ram, hard disk, and time are divided into multiple environment as virtual.
Virtualisation bring cost down and helps in management as resources are evenly distributed and centralized.
But so is dividing of bandwidth. Every division computer resources into virtual part is virtualisation. But when people hear about virtualisation they think of Platform virtaulisation which is a part of this concept.
Platform virtualisation is made possible hypervisor. They are quite old things. Being available since 1967. It is the virtual machine monitor. It create virtual machine which in turn enables to create software based physical machine environment.
They come in two types:
1. Type 1: They run directly on the hardware. They include Xen, Citrix XenServer VMware ESXi , Hyper-V and Linux with its inbuilt part kvm ( only OS kernel to have the capability to do so) .
2. Type 2: They run above a host OS. They include VMware Server,VirtualBox , Microsoft Virtual PC. Linux as kvm( this is the only one to be that capable of doing both thing!)
Type 1 do have advantages over Type 2 in terms of security.That said type things are marketing terms more now than anything else.