The circuits are known as virtual because they are not electrical ciruits where there is a direct electrical connection from end to end. X.25 circuits can be initiated and ended from the users terminals. Frame relay circuits are not created and ended by users at their terminals or PC's. However, the user may have an application running over a frame relay ciruit where computer to terminal sessions are initiated and ended by the user. These sessions are related to the application, not to the underlying frame relay network.
Frame relay relies on the customer equipment to perform end to end error correction.
X.25, in contrast, performs error correction from switch to switch. The networks of today are sufficiently error free to move the burden of error correction to the end points. There are many examples of devices that encapsulate other protocols into frame relay protocol, and hence are known as FRADs. A connection to a network that allows connection and disconnection to various points is a switched virtual circuit. Circuits that are routed through software switching devices like X.25 pads and frame relay networks are virtual.