It is a technology that allows us to share a single physical instance of an application or computing resource among multiple organizations or individual customers, collectively known as tenants, and the architecture itself is known as multitenant architecture. To do this it assigns a logical name to a physical resource and providing a pointer to that physical resource when demanded. The multitenant architecture offers virtual isolation among the multiple tenants. Hence, the organizations can use and customize their application as though they each have their individual and isolated instances running.
The following image can help you understand more about Virtualization:
