Virtual machines are virtually taking over the world. By itself a virtual machine is just a container that describes various resources such as memory, disk space, processor, and network card, and allocates them from a physical machine. As with a physical machine, it's the software bits (the operating system and applications) that make a virtual machine usable.
When you mix a virtual machine with real software you get a virtual appliance. Some complete Linux distributions as well as specialized apps are available as virtual appliances. Thanks to the ease in packaging one, there's no shortage of virtual appliances around, if you know where to look.