Virtual Hard Disk
The Microsoft virtual hard disk (VHD) file format specifies a virtual hard disk, which is encapsulated in a single file and is capable of hosting native file systems and supporting standard disk operations. This topic contains an overview of the new functionality that is offered in this version of Windows.
In Windows 7, VHD can be used as the running operating system on designated hardware without any other parent operating system, virtual machine, or hypervisor. You can use the disk management tools (the DiskPart command-line tool and the Disk Management MMC snap-in) to create a VHD file. You can then deploy a Windows 7 image (in .wim format) to the VHD and configure the boot manager for a native or physical boot of the Windows image, which is contained in the VHD.
Benefits of the new and changed features of VHD
An image format that runs on both physical computers and virtual machines also benefits developers and testers. This is because they use virtual machines to test new system and application software, but sometimes they need to run tests on physical computers to access a specific hardware device, like the graphics card, or to get accurate performance profiling. Native VHD boot also enables developers and testers to boot into a Windows 7 image without creating a separate partition on the physical computer for installing Windows.