Martin (of IBM) explains:
The overall management of the IT infrastructure is also simplified because virtualization decouples consumers and resources. Therefore, the consumer is not dependent on the specific implementation of the resource. With this decoupling, administrators can manage the IT infrastructure while mitigating any effects of management actions on the consumers. Management actions can be accomplished manually, semi-automatically, or automatically driven by service-level agreements (SLAs).
In its foundation, grid computing makes wide use of virtualization. Grid computing virtualizes the IT infrastructure. It deals with sharing and managing the IT infrastructure to dynamically provision the resources that meet user and application requirements, while providing simplified access to the infrastructure.
It is crucial to view and treat virtualization as a commodity and not blow it out of proportions. Virtualization will eventually take the IT to where it belongs. Out of our hands! No more manual operations, just like your electricity grid. It just flows! It ought to, right?
Read this nice article.
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