A virtual directory represents a web application and it points to a physical folder in your computer. A web application is accessed using a virtual directory name instead of a physical folder name. For example, if you have a web application called "Shopcart" in your machine, you will have a virtual directory for this web application. You will access your web application using the URL httP://localhost/Shopcart. If your virtaul directory name is "Test", then your web application url will be "http://localhost/Test".