Virtualization allows consolidating multiple servers onto a single physical server to reduce costs through better hardware utilization. It provides advantages like server consolidation, testing/development, load balancing, disaster recovery, and virtual desktops. Microsoft's strategy includes Hyper-V, their hypervisor-based virtualization solution first introduced in Windows Server 2008. Hyper-V features include increased availability, improved management of virtualized data centers, better performance/hardware support for virtual machines, improved virtual networking, and simplified deployment using .vhd files.