VirtualCamera is a virtual software camera. It needs no hardware. It can use your former medias, including pictures, video clips etc. as its sources, and let your application use it as a real camera. Most popular IM software such as MSN Messenger, Yahoo! Messenger, PalTalk, etc. support real time video chat. But if you have no camera, you will lose some interesting things. So you need the VirtualCamera.
If you already have a Web cam, you can use VirtualCamera too. It can easily switch its input to your real camera and easily switch it out. Sometimes when you want share some pictures with your net friends or you want to play your movies to them, you can use VirtualCamera.