When it comes to virtualization think of it as consolidation. I tend to think virtualization & cloud computer are similar in many ways. Check out the Common Craft video for Cloud Computer I love their videos since like you said they are explaining complex teams at a fifth grade level. All the hubbub you mention above is just a lot of noise talking about the same topic. GovLoop also has a Virtualization page that has Tweets, Videos, and more on it.
So my ten words or less here we go:
Virtualization -- Consolidating your hardware/software out of your agency to a "virtual" location.
Well that was 11 =)