Virtualization is a key technique in informatics: If you access a large and slow medium such as a hard drive or the internet, you are given the impression that you can access everything directly and many complicated intermediate steps are hidden from you. These steps often include the use of caches where data that you are likely to need again is stored on a local medium that is quicker, but also smaller. Caches are based on the observation, that one often only accesses a small amount of data at a time and that data frequently. Thus, if you haven’t used data for a while, you are less likely to need it again, and newer data can replace older data. For hard drives, RAM is used for caching, while web browsers cache internet data on the hard drive.
When using computers, there is one large virtualization hole: applications. You have to manage manually what to keep and RAM and what not. This is why Apple’s plans for Mac OS X Lion are interesting: applications are supposed to automatically save and restore their current state (open windows, etc.), like iOS applications. As a consequence, the dock won’t indicate any more what applications are currently open and applications will be opened and closed automatically. In a way that only finishes what is already partially happening: If many applications are open, there is not enough RAM and some older applications are pushed to the hard drive. That is, virtual memory gives you the impression that you have as much RAM as the hard drive (another example of virtualization). Older RAM content is written to disk if there is not enough room, any more.
It remains to be seen how fast restoring the app and its state is. At least on the iPhone it seems to work well. Then one issue remains: For some things, you need true multi-tasking which means that part of your application keeps running. This should not be hidden from the user and some kind of interface to manage these activities becomes necessary. Examples of such activities are playing music and copying files. It will also be interesting to see how/if Apple allows background apps to hook into the function keys for next song, pause, etc. App switching (as in command/control-tab) will probably show a few least recently used apps. This is an improvement from showing all open apps, which is sometimes not enough, sometimes too much. Finally, there is also the potential that this new management saves power, because less things run simultaneously.