A device driver is a program that controls a particular type of device that is attached to your computer. There are device drivers for printers, displays, CD-ROM readers, diskette drives, and so on. When you buy an operating system, many device drivers are built into the product. However, if you later buy a new type of device that the operating system didn't anticipate, you'll have to install the new device driver. A device driver essentially converts the more general input/output instructions of the operating system to messages that the device type can understand.
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Some Windows programs are virtual device drivers. These programs interface with the Windows Virtual Machine Manager. There is a virtual device driver for each main hardware device in the system, including the hard disk drive controller, keyboard, and serial and parallel ports. They're used to maintain the status of a hardware device that has changeable settings. Virtual device drivers handle software interrupts from the system rather than hardware interrupts.
In Windows operating systems, a device driver file usually has a file name suffix of DLL or EXE. A virtual device driver usually has the suffix of VXD.