To answer your questions:
1.)
Why?
First, see Stinker's points. He claims no IT background, but he's hit a lot of the major reasons. Many of these are exactly why I use virtualization is used in my current position.
In the rackspace of a 10U enclosure, I have the capacity to host upwards of 500 virtualized systems with redundancy.
Deploying a virtualized system from a template is ultra convenient from a system management perspective. There is also a concept of a system life cycle (from going live to its demise). A team member will come to me and request ten of machines for a given project which may be 6 months long. I can usually have the machines setup and ready in a day. I have access to multiple subnets in our network because of VLANs.
Hardware maintenance is a breeze. If I need to take a system down, I can move all virtualized systems off the hardware without anyone knowing it happens. I can do my maintenance and then bring the system back online and no one ever knew it happened. I recently upgraded 10 physical ESX servers (which requires 50 minutes down time each) without anyone ever knowing until it was completed. Once you actually spend some time in a larger environment and deploy and adopt a virtualized solution, you'll wonder why you ever used bare iron for everything.
Also, there is a concept of virtualized appliances. This is a nice way to deploy a set-and-forget system that is compatible with the different virtualization technologies (i.e. vmware, hyper-v, parrallels, etc). I could package you a solution and all you need to do is download the image and power it on with your virtualized environment and you have a full-blown appliance to meet your needs. One simple example could be a freeNAS, OpenFiler, or even
SmoothWall.
2.)
How?
There is a decent amount of planning that goes into this, but like anything it all depends on what you want to do. If all you want is 1-10 virtualized computers, you can do this very easily with several different types of solutions on a single computer like the one you have. You can create different OS to use for testing and sandboxing so that you don't harm your main machine.
If you want to deploy a larger environment like David uses or I use (maybe others, I don't know who else) you want to focus on a system that will be dedicated to something like ESX(i) (vSphere) or a dedicated Hyper-V system. You'll gain better performance and features geared for enterprise and medium to large businesses.
I've been using VMWare products since 2003/2004 (ESX 2.x) and I've not wanted to go back since then. If you want more examples or info, let me know.