Virginia is called a commonwealth because, like all of the United States, its government is comprised of and run by the people, as opposed to rule by a monarch. In U.S. law, there really isn’t a difference between the meanings of “commonwealth” and “state.”
The claim by the state of Virginia that supreme power is vested in the people dates back to the Interegnum in England, 1649-1660, when Oliver Cromwell established the Commonwealth of England. When Virginia again became a royal colony in 1660 with the reign of Charles II, it lost its distinction as a commonwealth. In 1776 when it adopted its first constitution, Virginia again declared itself a sovereign state, establishing an independent government for the common good or “weal.” The state has been designated a commonwealth ever since.
In actual practice in the United States, there is no difference between a commonwealth and a state. Both are governed by the people. Citizens of each have equal rights and responsibilities under the U.S. Constitution, and the states reserve the same powers to themselves as all other states. Because governance by the people is at the core of U.S. democracy and the designation of commonwealth was adopted so early, Virginia and the three states that claim the status – Kentucky, Massachusetts and Pennsylvania – are allowed to keep it.