Virtual Reality (VR) is the use of computer technology to create a simulated environment. Unlike traditional user interfaces, VR places the user inside an experience. Instead of viewing a screen in front of them, users are immersed and able to interact with 3D worlds. By simulating as many senses as possible, such as vision, hearing, touch, even smell, the computer is transformed into a gatekeeper to this artificial world.
Virtual Reality and Augmented Reality are two sides of the same coin.
You could think of Augmented Reality as VR with one foot in the real world: Augmented Reality simulates artificial objects in the real environment; Virtual Reality creates an artificial environment to inhabit.