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Virtual memory means file based memory - using a disk file to store information. For example - SWAP file on Windows.

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Virtual memory is a memory management capability of an OS that uses hardware and software to allow a computer to compensate for physical memory shortages by temporarily transferring data from random access memory (RAM) to disk storage. Virtual address space is increased using active memory in RAM and inactive memory in hard disk drives (HDDs) to form contiguous addresses that hold both the application and its data.
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Virtual memory is a component of most operating systems, such as MAC OS, Windows and Linux. Virtual memory has a very important role in the operating system. It allows us to run more applications on the system than we have enough physical memory to support. Virtual memory is simulated memory that is written to a file on the hard drive. That file is often called page file or swap file. It’s used by operating systems to simulate physical RAM by using hard disk space. To understand how virtual memory works we have to go back in time, before virtual memory even exited. In the days of Windows version 1 or 2, we actually couldn’t run many applications if we didn’t have enough physical RAM installed. As we know, the system itself is using a portion of RAM. If we run more applications, each application will also get its own portion of RAM. If we run too many applications, at one point we will run out of RAM. At that point we won’t be able to open any additional application. Back in those days we had to live with that. If we don’t have enough memory, we can’t run applications.

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