What is a virtual datastore?
A datastore, as it is used by VMware, is a storage container for files. The datastore could be on a local server hard drive or across the network on a FC or iSCSI SAN. Inside the datastore, you will find the virtual machines, VM disks, VM configurations, and any other files you place in the datastore (such as ISO files to install a VM). Datastores are using in VMware ESX Server (viewed with the VI Client) and in the new VMware Server 2.0.
Here is what a datastore looks like as see from VMware ESX & the VI Client: