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When you create a new website on IIS, you get to choose between an "Application" and a "Virtual Directory". What is the difference between those two options?
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For example, you might use a virtual directory when you want your application to include images from another location in the file system, but you do not want to move the image files into the physical directory that is mapped to the application's root virtual directory.
In IIS Manager, expand the node for the local computer and then expand the Sites folder. Right-click the folder that you want to convert to an application and then click Convert to Application. The Add Application dialog box is displayed. Click OK.
Virtual directory in a directory that is created in IIS to host a local application or go to a particular folder on the server physical or virtual directory is created . For example: in the development team , if you wish to receive your application, you must create a virtual directory and specify the physical path.
A virtual directory is a path or alias within a website that refers users to another directory where the actual data is hosted. The referred directory can be a physical directory on a local server's hard drive or a directory on another server (network share).
A virtual directory is just a pointer to where web pages are stored.
An Application reserves memory in IIS for your web pages. If you are attempting to run ASP pages and plan to make use of session variables and the such then you must use an application. An Application can make use of a virtual directory or it may just exist within the default web site directory (inetpub/wwwroot/)
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There are a few differences, here are the biggest:
These are the two biggest differences in my opinion, although there are other small ones as well.
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