On enterprise networks, or on the Internet, security constraints may require that different services are run on different, isolated servers. The problem with this one server per service approach is that most spend a lot of idle time waiting for some rare activity bursts.
Several technologies now make it possible to run several GNU/Linux servers inside a real, physical GNU/Linux server. As in physical servers, each virtual server is isolated from the others. So, this approach retains the benefits of separate servers, but makes it possible to share some hardware resources like the CPU and network bandwidth. On the other hand, each virtual server enjoys a reserved amount of RAM and disk space.
The benefits of virtual servers are obvious in terms of cost, power consumption, optimum use of hardware resources, and consumption of computer materials. There is another key advantage for hardware maintenance: virtuals servers can very easily and transparently be migrated from one physical server to another.
User Mode Linux - The original solution. Allows to run one or several Linux kernel executables on a Linux machine (with a standard kernel) as regular programs.
Xen - An increasingly popular alternative, with very little performance overhead. Also allows live server migration to other hardware. Requires a patched Linux kernel.
Virtuals servers all already very popular solutions for website hosting, but virtualization still has a very strong potential in corporate networks.