I first began to use virtualization for software development. Procuring development machines and building out test environments that reasonably mirrored production was expensive. Even when money and resources weren't the issue the lead time involved in assembling enough hardware to create an integration environment for new software was.

First generation server imaging and duplicating tools like Ghost helped but it was still a nasty and tedious process to build out a server farm complete with domain controllers, database servers, email servers, load balancers, etc. Virtualization software changed all that.

VMware was first on the block and their product provided inexpensive, easy to manage tools that allowed us to create server images that could then be cloned on demand and repurposed for a specific role. Since it was possible to "snapshot" virtual machines at any point in time they were very useful for testing things like new code, patches and fixes, and third-party tools. If something didn't work out quite right it was very easy to return the machine to the state it was in before the introduction of the new component.