Vagrant allows users to create and manage virtual machine environments through automation. It uses configuration files and plugins to interface with virtualization providers like VirtualBox to create VMs from templates called "boxes". Docker simplifies deployment of applications inside Linux containers by packaging code and dependencies into standardized images that can run on any infrastructure. Both tools help streamline development and testing workflows by making environments portable and reproducible. A hands-on lab demonstrates using Docker to containerize applications for development, testing, and production. Containerization with Docker provides a unified execution environment and is driving adoption of microservices architectures in industry.