If a virtual machine (VM) is being backed up as a whole, the VM -- whether it be Microsoft, VMware or Xen -- is...
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completely encapsulated in just a couple of files. It is generally encapsulated in the virtual machine disk file. Essentially, they are configuration files which in each system is a little different.
Then there is also their BIOS configuration, their NVRAM and everything else that would be normally associated with a physical machine. It is a lot like taking a ghost image of a running physical server, except that a ghost image takes the operating system and files from a logical level. The VM image contains not only that hard drive image, but also the configuration for the hardware that was presented to the VM.
So, a ghost image only contains the operating system and it might get pushed to a piece of hardware that may have a different number of processes, a different amount of RAM or a different network card configuration. But, when you restore a VM image, it's not only the image of the hard drives, it's also its hardware configuration, its NVRAM, its BIOS settings and everything that is logically needed to bring that server back online.