What does the term 'storage' imply in relation to Virtual Machines?

The term 'storage' in relation to Virtual Machines refers specifically to the space designated for VM use. In a virtualized environment, storage is a critical component that allows the Virtual Machine (VM) to function properly. This storage is where the VM's virtual hard disks, configuration files, and other related data are stored.

Every VM requires allocated storage to operate, as it needs a place to save its operating system files, applications, and any data it generates. This storage can be provided by various types of physical or cloud-based storage systems, and it can either reside on the same physical server where the VM is hosted or on a separate storage resource accessible over a network.

The other choices do not capture the essence of what storage means in the context of Virtual Machines. For example, default network capacity pertains to networking aspects rather than how data is stored. Physical server restrictions could refer to limitations in resources like CPU or RAM, which are separate from storage. External backup space focuses on a specific function related to data protection rather than the core definition of storage allocated for the VM's operation.