Virtualization refers to technologies designed to provide a layer of abstraction between computer hardware systems and the software running on them. By providing a logical view of computing resources, rather than a physical view, virtualization solutions make it possible to do a couple of very useful things: They can allow you, essentially, to trick your operating systems into thinking that a group of servers is a single pool of computing resources. And they can allow you to run multiple operating systems simultaneously on a single machine.
Virtualization has its roots in partitioning, which divides a single physical server into multiple logical servers. Once the physical server is divided, each logical server can run an operating system and applications independently. In the 1990s, virtualization was used primarily to re-create end-user environments on a single piece of mainframe hardware. If you were an IT administrator and you wanted to roll out new software, but you wanted see how it would work on a Windows NT or a Linux machine, you used virtualization technologies to create the various user environments.
But with the advent of the x86 architecture and inexpensive PCs, virtualization faded and seemed to be little more than a fad of the mainframe era. It's fair to credit the recent rebirth of virtualization on x86 to the founders of the current market leader, VMware. VMware developed the first hypervisor for the x86 architecture in the 1990s, planting the seeds for the current virtualization boom.