How may I slice thee, let me count the ways
tl;dr: How may I slice thee, let me count the ways. Simply put, this is platform as a service (PaaS).
Basically, you have four collection layers to play with. Starting from the top, it goes Users <-> Applications <-> Operating System <-> Hardware. Everyone should be familiar with multi-user machines. Here you are slicing things up so each user acts as if the entire machine was theirs and no one else's. That's your basic shared desktop and not too long ago your basic server. The next layer down is where were playing now. That's where you slice up the applications so that each of them, or a given collection of them, thinks that they have an entire operating system when in fact it is shared. This is where you find Docker, chroot jails, Solaris zones, Sandboxie, ThinApp, App-V, even terminal servers really.
In Windows, the result is that an application, or collection of them, has it's own registry, directories, and all the other niggling little details of what an application needs to change when it is installed on a computer but in reality is kept isolated to it's own sandbox. Close the application and foofff, all those changes are gone. As you would expect, especially after the list above, there are a lot of ways you can do this including this new way. Here Amazon is offering cloud (virtual) machines running on Amazon hardware each of which is running cloudy (further virtualised) applications on top. To the user, there's nothing here, move along. To an system administrator, this is rather nice When the user logs on it triggers an assembly process: the users (personalised or not), the user's (personalised or not) applications served up as required, on top of the user's operating system (personalised or not), and lastly the user's (personalised or not) machine. That last one requires a bit of explanation. Some users actually do need a particular hardware set for, say, CAD/CAM, medical imagery, &c.
Where it really shines is that you, hopefully, only need to update only pieces of the above (one particular app, OS...) since the whole thing gets slapped together as it's used which, again hopefully, increases efficiencies at all levels of the stack (users all the way down to hardware). And, by the way, it also makes compliance a bit easier for whoever your dealing with for licenses and such. You get real-time reports on who's using what, where, and when.It's nice enough that I'm contemplating it for our rather strange home-office, at least two firms, one house. [I'm going to commit mayhem on the next person with an EULA that shows up here. Ye Gods, Above and Below!] You can rightfully say "nothing here, move along" except for the fact that each iteration improves things measurably. Docker is newest and rightfully best to date, IMNSHO. [In My Not So Humble Opinion. Everyone who knows me knows I'm not humble.]