Virtual reality (VR) creates computer-generated worlds that users can explore and interact with. Early examples include flight simulators in the 1920s and Morton Heilig's Sensorama machine in 1957. The term "virtual reality" was coined by Jaron Lanier in 1987. VR has applications in healthcare, military training, education, and entertainment. Issues include motion sickness, high development costs, and integrating applications. Future improvements could include photorealistic graphics, collaborative VR worlds, and affordable consumer hardware.