A Virtual demo is anything a representation of a real item in a virtual form. Let's say you have a product design and you want to demonstrate how it works. We can build it "virtual" using photo, video or 3d model to demonstrate it's function or use.
Let's say you have a phone with a touch screen and you want not only to see it's program function, but explore it's body and shape. Better yet let's say you don't have the phone, just rough sketches. Maybe it's for a presentation to get funding for a project. In this case we would build the phone in 3d in photo-realistic way so that your consumer could rotate it and get a feel for the phone. Then we work on the interface which works into the 3d model using web based software for the interact functions. This means they get to see and use a phone that doesn't even exist yet.
You can see an example of this at the bottom of the page. We had an alarm company that wanted to show how thier alarm works - how it contacts police, hospitals, and the fire department, and how it protects you.
http://www.isialarms.net/virtual-demo.html