Virtual stock markets are also known as stock market simulators. They are primary used for two different purposes. The first purpose is to simulate the stock market. This can either be done with delayed data to allow a trader to learn with play money before he or she starts trading with real money. It can also be used to predict future events and provide additional information to aid traders. The other usage is to create fantasy simulators where people can play a stock market game where they buy and sell virtual stock, sometimes to win real prices.
Binary options is a product that is closely related to fantasy simulators and stock market games. They are virtual financial instruments based on real stock where you win a lot of money if you correctly predict the market movements of a certain stock. They are basically a way to gamble on the stock market. You can learn more about binary options here.
Financial simulators designed to help a novice trader to develop a feel for the market normally use real market data with a delay of about 15 minutes to simulate the stock market. This way the user knows if his or her trade would have made money or not in the real world rather than in a virtual pretend world. A simulator like this can be a very good way to get your feet wet in the market, but it can also be rather frustrating if the trading end up going well as it can sometimes be easy to see the virtual profits as money you should have earned if you had traded for real money right away. It is of course true that hat gains will be virtual, but so will losses this can be a great safety harness for you until you feel confident in what you are doing. You will not get rich but you will not loose your entire bank roll either.
Fantasy simulators are purely for entertainment purposes. Sometimes offers prices to winning members, sometimes not. Different simulators can have different competitions and different rules for what is required to win. It is common for virtual stock market games to list commodities that can normally not be traded such as stars, movies or music albums. These games can sometimes have betting systems connected to them making it possible to risk real or virtual currency.
One example of a popular virtual stock market is Virtual Stock Exchange.