It is the latest trend in virtualization. There are 2 techniques, containers and paravirtualization.
Containers virtualize an OS's operating environment, not the hardware.
Paravirtualization virtualizes part of the operating environment and selectively emulates necessary hardware.
Both these are faster and much more efficient than traditional virtualization.
So, those of you working on VMWare and other traditional virtualization platforms, try out the new products like XenSource's Xen and Linux -VServer. Other free packages include Qemu and Boch's.
As for why go for virtualization, the benefits are limitless. Try out all unstable software and do all your experimentation in virtual environments without affecting your host OS or valuable data. Run multiple servers on a single server hardware.