Virtual machines allow users to run different operating systems and applications on a single physical machine without the need for multiple computers or complex hardware configurations. They provide a detached environment that can be moved between physical servers, making it easier to manage and maintain multiple virtual machines. Virtual machines can also be used to emulate old or unsupported operating systems, allowing users to run legacy software on modern machines. While they have several benefits, including improved security, ease of use, and increased flexibility, they also have some limitations, such as the need for powerful hardware and potential performance issues.