SIMONANDERSEN  Toast Titanium mounts images in a way that appears indistinguishable from the real thing. Also Disk Utility which is part of Mac OS X mounts many types of disk images.  
(Version 1.1.2)

BURNINGTHUMB  After install and restart you will get a CD icon in the menu bar and you choose what you want to do from the menu bar icon.  
(Version 1.1)

ZO219  What a pity that people who do not yet know what they are doing with an app still feel entitled to rate it as one star. Which tells the rest of us nothing, except that you are new. It's not helpful about the app.  
(Version 1.1)

BURNINGTHUMB  It works for DRM Music, but also for Audio Books which have a similar problem but require multiple CDs. The Audio Book Transformer software actually works with an unregistered copy of Virtual CD-RW (i.e. if you purchase Audio Book Transformer you don't need to also purchase Virtual CD-RW if the only thing you are doing is converting Audio Books).  
(Version 1.1)

NAOH  It may be that the driver 'tricks' the computer into thinking the virtual disk is actually a real CD (or DVD).

Some software expects real optical media to work properly, and won't work with normal virtual disks. This software would work around that.  
(Version 1.0)

BURNINGTHUMB  The Virtual CD-RW is not a disk image (.dmg) and has nothing to do with .dmg files and does not use them in any way.

The Virtual CD-RW is a kernel extension that looks to the Mac OS X, like a physical CD-RW drive.

With the Virtual CD-RW you use the Disk Recording interface to "burn" and end up with bin/cue disk image files instead of a CD. This is completely different than mounting a disk image and copying files to it. A disk image is more like a floppy disk, zip disk, or hard disk and Virtual CD-RW is like an optical drive in which you insert, burn, erase, and eject virtual CD-RW media.

If you don't know why you would want to do things as a Burn instead of a Copy then you don't need Virtual CD-RW.

An example of where you would use Virtual CD-RW could be burning from iTunes, burning from Music Man, burning from iVCD, etc. as there are many applications that use the Disk Recording interface and without a Virtual CD-RW (if you wanted an image of those disks) you would need to burn to CD and then rip that back to disk.  
(Version 1.0)