what real benefit is it to run your Java application stack inside another VM?
By doing this, your JVM will run on virtualized hardware that you can modify and run in parallel of other virtual machines. This is a nice way to slice a big server into "shares" that you can allocate on demand.
(EDIT: I'm answering a comment from the OP directly in this answer)
I get what you're saying, but why would one not be able to do the very same thing as separate processes on the host OS?
I could mention that a guest can possibly run another OS but this is not the most important part. As pointed out in another answer, the biggest difference is that a virtual machine is isolated from other VMs, it's are real dedicated environment. The port stuff was a good example but I prefer to illustrate it this way: another process won't eat "your" CPU cycles. This is a very important difference, especially for IT teams that usually don't like to share resources. Instead, you can size a virtual machine exactly as needed, possibly dynamically, and bill IT teams for what they are really using. This is IMO what makes mutualisation of resources actually possible (and thus costs cutting).