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virtual = not really existent, in contrast to pysical memory
I don't believe that virtual memory is a clearly defined technical term specific to microcontrollers.
The term may be used with microcontrollers that have a MMU (memory managment unit) and can "map" physical memory to different logical (or "virtual") addresses. It would be easier if you give a context for your question.
Virtual memory is a substitute for ram when all the ram is occupied. The virtual memory is on hard disk. It is a slow and cumbersome substitute. It tends to give the disk a workout.
My PowerMac has a program called Activity Monitor. One of its functions is to display
amounts of memory being used. Some of it is in ram (wired), some is virtual (disk). My ram is 2GB (it does not change). Virtual can be any size (mine is currently 34GB).
There's a relation to a PC's virtual memory in so far that it also depends on a MMU. In case of the memory pages swapped to disk, the memory managment unit detects the intended virtual memory access and reloads the memory content before program execution can continue.
I was all set to bring up 'extended' and 'expanded' memory, which were used in DOS to get around the 640k ram limit. To command the computer to use the additional memory, we had to insert special commands in the startup routine (autoexec.bat or config.sys).
Bill Gates claims he never said '640k is more than enough memory for anyone.'
I think the first large scale 'microcontroller' with virtual memory was the 80186/80286 which although not advertized, worked in real or virtual mode by simply locking the values in the segment registers together (real mode) or allowing them to hold different values (protected or virtual mode). They did it on a purely silicon level, primarily to allow programs to 'think' they used the same memory addresses while in reality each was in a different region of physical memory.
The Bill Gates story dates back to the early 80's and I think it's true. The first IBM PC's I worked on only had 64K of RAM and a cassette tape for mass storage!