This one snuck up on me. Parallels, my OS X virtualization layer, runs Virtual Appliances - whatever the heck they are.
Near as I can tell a VA is a self-contained OS/application combination that works directly with the Parallels environment. So they don't need a host OS, instead the functions of a classic operating systm are divided between a layer within the VA and the Parallels environment.
This seems a profligate use of resources (each VA must repicate a lot of OS functionality), but memory is relatively plentiful and they probably use a slim version of linux.
So you can run a Linux app on OS X without having to create a Linux environment, and, in theory, each VA is a self-contained world.
I can't think of a use yet, but I'll keep watching ...
Update 5/7/07: I've been thinking more about this. It's an interesting variation on the theme of "routing around" the immovable Monopoly. I've thought of a few applications; so far they're all either security related (robust encrypted and portable environment) or are in some way covert (breaking DRM, etc). Interesting.