A virtual server farm is a networking environment that employs multiple application and infrastructure servers running on two or more physical servers using a server virtualization program such as VMware or Microsoft Virtual Server.
A server farm is a group of computers acting as servers, housed together in a single physical location. A virtual server is a server shared by two or more individuals, so that each owner can use and administer it as though they had complete control of it. Virtual server farms combine these two concepts in the cloud.
In a virtual server farm, the work loads of the physical and application servers are separated to create a dense virtualized environment offering the "best of both worlds" including server consolidation (reduction of server sprawl), redundancy for failover as well as HA (high availability), and optimized resource utilization.