What Does Virtual Hard Disk (VHD) Mean?

A virtual hard disk (VHD) is a type of disk drive that has similar functionalities as a typical hard drive but is accessed, managed and installed on a virtual machine infrastructure.

Techopedia Explains Virtual Hard Disk (VHD)

A virtual hard disk operates like a conventional physical hard disk, having all the capabilities to create disk sectors, files and folders, run an operating system and install and execute other applications. A virtual hard drive is created on a physical hard drive, but has a logical distribution of its own. In turn, it can host many different virtual hard drives simultaneously, depending on its size. Each of the created virtual hard disk is created as a tightly coupled drive and doesn’t overwrite or interfere with the operation of other VHDs.