As virutal directory points to physical path of the application, so if the IIS root directory is C:\inetpub\wwwroot and the application is stored at D:\websites, than we need to create a virtual directory but if the application content is placed at C:\inetpub\wwwroot, then why still need to create virtual directory.
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3IIS isn't used just for ASP.Net, it can serve up PHP for example...so the type of application and pool varies, it's not automatically created and tied to then ASP.Net engine.
If you can clarify a bit more what you're trying to do maybe we can help further. For example, if you want to point the root application to another folder and it be an application or create another website, IIS allows you to do any of that...you just need to update the question with which version of IIS, as the instructions very between them.
If the IIS site will host a single ASP.NET application you can place it at the root (C:\inetpub\wwwroot) and you don't need to create a virtual directory because when you create the site it is already a virtual directory.
Actually you don't need to create a virtual directory. What you need to do is define it as an application folder, adding a virtual directory does this by default so that's why it works. All you really need to do is right click the folder under your website, click properties and under the Application Settings section click create. Your folder will then have a gear icon off to the side denoting it as an application folder.
As to why application folders are necessary, I believe it's a way of forcing you to choose which Application Pool you want the application running in rather than having every sub directory application running off the same pool by default.