What is Virtualization?

The foundation of cloud computing is virtualization. It is the abstraction of logical resources from their physical underpinnings. This abstraction allows these resources to be moved around, executing on actual physical resources where most convenient or most appropriate. The movement can be from one machine to another located in an organization's own data center, or it can be from one machine in the data center out to someone else's (e.g., Amazon's EC2) data center. But virtualization is key to this abstraction.