One of the major reasons that say virtual systems are very great is the flexibility of the VHDs, the virtual hard disks. In comparison to a physical hard drive, it is easier and quicker to create, add or remove a VHD from a VM, the virtual machine. A VHD also supports several configurations which allow a user to use his physical hard drive space very efficiently.
There are basically 2 main types of VHDs as follows:
Both the types of virtual hard disk vhd drives have an upper size limit which defines how large will the disk appear to the VMs which will be hosted within the Virtual Server. Though, the fixed-size virtual hard disks occupy the physical drive space automatically on the file system of the host machine, whereas, the dynamically expanding VHDs allocate the space only as it is needed.
The linked VHD maps to the single most physical hard drive on the host machine. A linked hard disk gets created mainly to convert a physical drive into a virtual one. First of all, you need to create the linked hard disk, and only after that, you convert that into any of the two above mentioned types of VHDs, either the fixed-size one or the dynamically expanding one.
Be cautious of making the linked VHD accessible to a VM, as the virtual machine can alter the data saved on the physical hard drive of the host machine.
A great benefit of using the VMs is that we hold the privilege to roll back a virtual machine to its original state any time. This can be accomplished by enabling Undo disks in the Virtual Server. If you will check this particular box, then the Virtual Server automatically creates a file with extension as .vud for every VHD which is attached to the virtual machine. This process effectively makes the previous files with .vhd extension as read-only, and after that, all the write operations will then be carried out to the undo files. While choosing to switch off a virtual system, one can keep these undo disks, and also commit the required changes (that will update the base .VHD format files) or even discard any changes done (that will effectively roll a virtual system back to its previous state before the user had enabled the undo disks).