UAC has been introduced with Windows Vista.  It is an attempt to improve the security of the operating system by restricting all users to running in a 'standard user' environment and requesting the user to confirm certain events (such as installing software, copying/deleting a file etc).  Users with Administrator privileges will also be required to confirm certain events.  This system is designed to prevent unauthorised software from running (ie. Malware etc).

UAC can be turned off via the Control Panel (see User Accounts), but please note that it isn't recommended.

File and registry virtualization has also been introduced with Windows Vista as part of UAC.  It has been included in an attempt to remain compatible with non Vista compliant applications and existing software products.  File and registry virtualization is what happens when a piece of software wants to write data to a location that the user does not have access to.  Instead of denying the request, Windows will redirect the data to the Virtual Store.

Virtualization can cause complications as in the examples listed below.

Example 1: Two users have different levels of access.  User 1 may have a lower access level than User 2, which means both users could potentially be looking at a different sets of data (eg. different settings).

Example 2: A user runs an application with Administrator privileges, the application is able to successfully write directly to all intended locations because it has Administrator access.  The user then subsequently runs the application as a standard user, the application is no longer being run with Administrator privileges and therefore does not have the same level of access and writes to the Virtual Store.  The original settings are now lost (unless the user runs the application as an Administrator again).