From Wikipedia:

1.  Virtual sex is a form of non-penetrative sex where two or more people gather together via some form of communications equipment to arouse each other by transmitting sexually explicit messages. Virtual sex describes the phenomenon, no matter the communications equipment used. Also called hot chat.

2.  Virtual sex also refers to the genre of CD-ROMS and DVDs directed by Joone and released by Digital Playground in which the viewer can "command" a famous porn actress by selecting from a menu of explicit scenes.