Short for virtual machine monitor, in virtualization technology it is the host program that allows a computer to support multiple and identical execution environments. The VMM provides the underpinnings for virtualization management, which includes policy-based automation, virtual hard disk, life cycle management, live migration and real-time resource allocation.
You can basically think of the VMM as the part of the code in firmware that manages either multiple operating systems or multiple instances of the same operating system on a single computer system. Its job is to manage the system's processor, memory and other resources to allocate what each operating system requires. VMMs provide the means, through emulation, to divide a single, physical server or blade, allowing multiple operating systems to run securely on the same CPU and increase the CPU utilization.