A VHD, or Virtual Hard Disk, is a file format used to represent a virtual hard drive. It allows users to store an entire operating system, applications, and data in a single file. VHDs are commonly used in virtualization environments, such as those created by Microsoft Hyper-V or VirtualBox, enabling multiple operating systems to run on a single physical machine. VHD files can be mounted and accessed like a physical hard drive, making it easy to manage and transfer data. They support various features, including snapshots and dynamic resizing, which enhance flexibility and efficiency in managing virtual environments.