I'd guess that the virtual machine of C pertains to the addressing and the presentation of memory as a "giant array of bytes". Stack addresses start high and "grow down", heap addresses start low. These addresses need not exist on the machine. For example, two running C processes can have 0x3a4b7e pointing to different places in machine memory (which prevents them from clobbering each other).
Please, someone with more knowledge than me, fill me in on where I'm right and wrong.