In my opinion, one of the best things to happen to Oracle Database Appliance recently was the availability of virtualization on the system. The virtualized Oracle Database Appliance (or "Oracle Database Appliance Virtualized Platorm" as it is officially called) allows you to run multiple virtual machines, hosting different tiers of your system architecture all within a single Oracle Database Appliance. And users love it! This is a major development for those looking for drastic cost reductions in managing their traditional multi-tier systems or even consolidating many systems into one, etc. Now you can have one single platform, that is already extremely easy to setup, operate, and manage, and host many virtual servers, deploying everything from your database to application logic tier to the web-tier and other supporting systems such as a load balancer, security server, etc. all in a single environment. Some ISVs are already looking for building and selling ready-to-go complete systems for their customers with everything inside one Oracle Database Appliance.
The Oracle Database Appliance Virtualized Platform can be used with Oracle Appliance Manager (OAK) 2.5 and above for V1 hardware and with OAK 2.5.5 and above with Oracle Database Appliance X3-2 hardware. If you are on the non-virtualized deployment of your Oracle Database Appliance (and all new systems are currently shipped from the factory with the non-virtualized ISO image), then you must re-image the server with the Oracle Database Appliance Virtualized Platform ISO image. Once you have re-imaged the servers with the virtualized platform ISO image, Oracle Appliance Manager lets you deploy a special virtual machine or domain called (ODA_BASE domain) to host all your databases. You allocate CPU and memory to this ODA_BASE domain as per your need (and available database licenses). Dedicated access to shared storage is provided to this domain by design (bypassing any negative performance impact of virtualization that it would otherwise incur) using the PCI pass through technique. The rest of the server capacity is available for deploying additional virtual machines for your application and web tiers and for other purposes.