Physical
A network server can have a single role or many. In a small business is not uncommon to have a single server provide most if not all services. A server can act as a data repository allowing users to efficiently share information. A network server can host client server applications and/or provide centralized management of security policies across your organization. Since the server is a fundamental component of the network it is imperative to have a sound backup solution and disaster recovery plan to help ensure business continuity.
Virtual
Virtualization is a technology for sharing physical hardware between one or more virtual servers by use of specialized software called a Hypervisor. Although not suited for all situations virtualization can provide a more efficient means for utilizing server hardware thereby reducing maintenance costs, power consumption, and physical foot print. Virtualization can also provide affordable failover capabilities and/or faster disaster recovery for increased network reliability.