Virtualization means to create a virtual version of something, typically on some form of computer software. The term originally came to mean the process of logically dividing a computer system between separate applications, but as seen evolved in its core meaning.
Something being virtual means that something was created by computer software to give the appearance of actually being in existence. That particular thing is carried out and stored on a computer, and can be accessed through particular network.
Virtualization comes in many degrees of reality. When most hear the term, they think about virtual online games, such as games that allow the user to feel as if he is making over a face or shopping, running a store or controlling an avatar. Games such as the Sims advertise virtualization of life itself. More complex virtual systems, exist, though. Things like training doctors to do surgery can now be uploaded on a disk and through virtual reality, doctors can feel as if they are really preforming surgery without the risks of having a life patient. Systems also exist to play out scenarios ranging from certain simple decisions like what would happen if a dish was cooked for so long to what would happen if a particular area was bombed.