A VM is an on-demand virtual server that you spin up for your needs. It is geographically located in one of Google's data centers, but you only choose the region and zone, not the precise location. Although you share some of the infrastructure resources with other users, this sharing is transparent to you.
A VM requires a persistent disk to run on and an operating system such as a Windows or Linux distribution to boot on. Although very much abstracted in a cloud computing context, a GCE disk would refer to a physical drive that the computer can boot on.
An image exists on top of a persistent disk, and includes the operating system necessary to launch the instance. A typical use of an image is to enable sharing ...
