A Virtual machine (VM) refers to an operating system installed on a physical machine in a way that allows it to work as a standalone physical system. The process of creating a virtual machine is called virtualization. Some companies use VM hosting to describe virtualization solutions, such as virtual private servers.
A virtual server is a type of virtual machine. It is an isolated compartment on a physical web server that operates as a standalone server with allocated resources and root access. Other examples of virtual machines include DOSBox game emulators.