Source : Free On-Line Dictionary of Computing

Virtual Device Driver
     
         (VxD) A {device driver} under {Windows
        3.x}/{Windows 95} running as part of the {kernel} and thus
        having access to the memory of the kernel and all running
        processes as well as raw access to the hardware.  VxD's
        usually have the {filename extension} .386 under Windows 3.x
        and .vxd under Windows 95.  VxD's written for Windows 3.x can
        be used under Windows 95 but not vice versa.
     
        (1997-02-27)