Virtual hard disk (VHD) is a disk image file format for storing the complete contents of a hard drive. The disk image, sometimes called a virtual machine, replicates an existing hard drive and includes all data and structural elements. It can be stored anywhere the physical host can access

There are two main types of virtual hard disks: fixed-size and dynamically expanding. Both types have a maximum size value that specifies how large the disk will appear to virtual machines. However, fixed-size VHDs will automatically take up the specified amount of physical disk space on the host computer’s file system, whereas dynamically expanding disks will allocate space only as needed.

In most circumstances it is best to configure virtual machines to use virtual hard disk instead of physical hard disks. A virtual disk is a file or set of files that appears as a physical disk drive to a guest operating system. When you configure a virtual machine with a virtual disk, you can install a new operating system onto the virtual disk without repartitioning a physical disk or rebooting the host. A key advantage of virtual disks is their portability. Because the virtual disks are stored as files on the host machine or a remote computer, you can move them easily to a new location on the same computer or to a different computer.