In Web Servers context, a Virtual Host is a way of dividing the server into multiple independent hosts, delivering each one's associated content; each virtual host has its content placed in a separated local directory in the file system.
A very common example is that of shared-hosting service offered by many companies, in which different named sites have the same IP address. All this is possible thanks to the Host HTTP header specified in the HTTP/1.1 protocol, that allows the client to specify to which named host it will target.