VM stands for http://en.wikipedia.org/wiki/Virtual_machine, to run multiple operating systems in an emulated environment.
There are a few good programs: http://www.vmware.com/, http://www.virtualbox.org/ and http://www.microsoft.com/windows/virtual-pc/ for example.
What's the difference? Watch: http://www.youtube.com/watch?v=pcAhHplFseI
So in essence I can run MSDOS, Win95/98/ME/XP/Vista, Linux. You name it, on my current OS thnx to this handy piece of software. It's like a PC on my PC. Dunno how else to explain it! Lolz!
Dual booting is also a good solution though. Especially if you have an older PC or faster software requirements because emulation takes a bit more processing power. However to run a few DOS and old Windows programs on the systems of today it is not necessary to dual boot. Anyways it depends a bit on your computer specs, the OS you'll need, the software you want to install and personal preference; a dual boot + using VM is also an option of course. Whatever works best!
Another advantage is I can play Fallout 1, 2, Tactics or any of my favourite oldschool games in windowed mode and surf the net while I'm at it. Don't worry, there is a full screen option too!