The program thinks it has a large range of contiguous addresses; but in reality the parts it is currently using are scattered around RAM, and the inactive parts are saved in a disk file.
Virtual memory is a computer system technique which gives an application program the impression that it has contiguous working memory (an address space), while in fact it may be physically fragmented and may even overflow on to disk storage. Systems that use this technique make programming of large applications easier and use real physical memory (e.g. RAM) more efficiently than those without virtual memory. Virtual memory differs significantly from memory virtualization in that virtual memory allows resources to be virtualized as memory for a specific system, as opposed to a large pool of memory being virtualized as smaller pools for many different systems.
Note that "virtual memory" is more than just "using disk space to extend physical memory size" - that is merely the extension of the memory hierarchy to include hard disk drives. Extending memory to disk is a normal consequence of using virtual memory techniques, but could be done by other means such as overlays or swapping programs and their data completely out to disk while they are inactive. The definition of "virtual memory" is based on redefining the address space with a contiguous virtual memory addresses to "trick" programs into thinking they are using large blocks of contiguous addresses.
All modern general-purpose computer operating systems use virtual memory techniques for ordinary applications, such as word processors, spreadsheets, multimedia players, accounting, etc. Older operating systems, such as DOS and Microsoft Windows of the 1980s, or those for the mainframes of the 1960s, generally had no virtual memory functionality - notable exceptions being the Atlas, B5000 and Apple Computer's Lisa.
Embedded systems and other special-purpose computer systems which require very fast and/or very consistent response times may choose not to use virtual memory due to decreased determinism.
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