A snapshot is a frozen image of your virtual OS at any particular point of time. This feature is very useful for backups. In my case, when I had setup the entire Japanese Environment by installing the SQL Server 2005 Japanese and Sun Java System Application server 9.1 Multi language. The application was up and running I created a snapshot for this. Snapshots enable a tester to return to last stable environment if anything goes awry. You can create snapshots only when the Vmimage is Powered Off. The snapshot created is saved in the same folder as your VMImage. You can just revert to snapshot if your setting gets corrupted. This saves time of the testers of uninstalling and installing or setting the corrupted environment right.