Docker can run within a VM, or on your computer if you're not on a Macintosh (Mac's kernel is...for now...not supported). I usually create a Vagrant virtual machine of CoreOS, which works with Docker very nicely.

Docker is a utility which uses "containers". Docker containers are usually used to run one process at a time (apache or mysql or python or grep or anything, really).

You can connect multiple docker containers to create a functioning app. Running one for database and other one for running your code would a simple example.

Fig tries to make the process of making Docker instances work together easy.