The word "virtual" implies something that only appears to exist. In web hosting terms, a virtual web server is a device that portrays itself to the user and the Internet as a single, dedicated computer.
The concept of a virtual web server began with virtual web hosting when it became necessary for a single Internet address to respond to requests for many domain names. The focus was entirely on serving web pages and did not extend to email, FTP, or other similar services. It is relatively easy for web server software such as Apache to handle requests for multiple domains, and developers soon adapted email and FTP software to also listen for other domains on the same IP address.
In the web hosting industry, the term "virtual web server" has become a marketing by-word, and therefore the phrase can mean any number of things. In most all cases, it refers specifically to a single computer with a single operating system running web-hosting software capable of listening to requests on multiple domains. There has been a move recently by leading-edge developers to build true virtual servers that give customers exclusive access to the operating system without the expense usually associated with dedicated web hosting.