When we traditionally talk about a server we're talking about a physical computer having a operating system with one or more application/s.
Virtualization allows us to separate the hardware (the actual physical computer) from the operating system and applications. Through virtualization no longer are we limited to one physical computer having only one operating system.
For example you might have one physical computer + OS + application that is acting as a file server and another completely separate physical computer + OS + application that is acting as an email server. Forget what a file server or email server does, it's not important. What's important is that they traditionally would be separate physical machines with their own operating systems and application/s.
By using special software and doing what we call "virtualization" or utilising "virtualization" we can take the OS + application from the file server and the OS + application from the email server and put both these on the same physical computer and both of them will think they are the only server running on that physical computer, to them it's no different from being on their own physical computer. The reality is both are actually sharing the same physical computer.
How do we actually virtualization? What do we need and what steps do we take? We'll look at this in a later post.