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Virtual machines are software-based emulations of physical computers that run multiple operating systems and applications on a single physical server. They allow users to run multiple virtual servers on a single physical machine, enabling greater efficiency in resource utilization and reducing costs associated with hardware. Virtual machines are commonly used in data centers and cloud computing environments to create isolated and secure environments for running applications and services. They provide flexibility and scalability, as virtual machines can be easily created, modified, and removed as needed.