What is virtual hard disk?
Virtual hard disk (VHD) is a disk image file format for storing the complete contents of a hard drive. The disk image, sometimes called a virtual machine, replicates an existing hard drive and includes all data and structural elements. It can be stored anywhere the physical host can access.
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There are two main types of virtual hard disks: fixed-size and dynamically expanding. Both types have a maximum size value that specifies how large the disk will appear to virtual machines. However, fixed-size VHDs will automatically take up the specified amount of physical disk space on the host computer's file system, whereas dynamically expanding disks will allocate space only as needed.