Which of the following best describes a virtual machine?

A virtual machine is fundamentally a software-based simulation of a physical computer. It enables users to run multiple operating systems on a single physical hardware setup. This is made possible through virtualization technology, which abstracts hardware resources and allocates them to the virtual machine as needed. Each virtual machine operates separately as if it were a standalone computer, complete with its own operating system and applications.

By contrast, the other options describe different concepts. For instance, a physical computer used for cloud storage refers to actual hardware that serves as a cloud storage server but does not capture the essence of a virtual machine's purpose. A standalone operating system refers to an OS that operates on a physical machine without virtualization, which is not the same as a virtual environment. A server dedicated to file storage indicates a specific role of a server for storing files rather than describing the virtualization aspect that defines a virtual machine. Thus, the core definition of a virtual machine aligns best with being a software-based simulation that allows for various operating system environments to coexist on a single physical machine.