The first use of virtualization that I can remember was VM/370. It did the things you said plus hosted systems for many users connecting via terminals. Supporting legacy systems and getting higher utilization with multiple workloads were also advertised benefits of VMware on x86. IBM and NUMA vendors touted isolation of multiple workloads or users with things like LPARS. The cloud providers now claim a lot of this stuff.
So, it seems like it was intended to do these things going back to the 70's. They also designed insecure, bloated solutions that INFOSEC founders like Paul Karger called them out for. Resulted in better designs like KVM/370, KeyKOS, VAX VMM, separation kernels, and recently mCertiKOS. Most peddling virtualization for multiple users still use bloated, untrustworthy components though.
So, it seems like it was intended to do these things going back to the 70's. They also designed insecure, bloated solutions that INFOSEC founders like Paul Karger called them out for. Resulted in better designs like KVM/370, KeyKOS, VAX VMM, separation kernels, and recently mCertiKOS. Most peddling virtualization for multiple users still use bloated, untrustworthy components though.