Uses
Disk images are used heavily for duplication of optical media including DVDs, Blu-ray disks, etc. It is also used to make perfect clones of hard disks.
A virtual disk may emulate any type of physical drive, such as a hard drive, tape drive, key drive, floppy drive, CD/DVD/BD/HD DVD or a network share among others. An emulated drive is typically created either in RAM for fast read/write access (known as a RAM disk), or on a hard drive. Typical uses of virtual drives include the mounting of disk images of CDs and DVDs, and the mounting of virtual hard disks for the purpose of on the fly disk encryption ("OTFE").
Some operating systems such as Linux and Mac OS X have virtual drive functionality built-in (such as the loop device), while others such as Microsoft Windows require additional software. Windows 8, the upcoming version of Microsoft Windows, is scheduled to have native virtual drive functionality.
Virtual drives are typically read-only, being used to mount existing disk images which are not modifiable by the drive. However some software provides virtual CD/DVD drives which can produce new disk images; this type of virtual drive goes by a variety of names, including "virtual burner".
Read more about this topic: Disk Image Emulators