I've attached some notes Andy took from a call at the weekend as well as a diagram I whipped up today which I hope will help us to use common terminology and avoid the ambiguous term "virtual machine" (which can refer both to the host and the guest, or both together - as distinct from what we mean when we say "java virtual machine"). The proposed terminology is also generic and thus compatible with any work we do in the future at the platform and/or application layers (as deployed applications look just like virtual machines in that they can be started, stopped, etc.).

Container refers to the host of an individual workload (e.g. an empty virtual machine [host], runtime, interpreter, etc.)
Workload refers to a generic load that the user wishes to execute in the cloud (e.g. virtual machine files [guest], RoR app, JAR/WAR, etc.)

Template refers to a COPYable workload that cannot be run (e.g. a public AMI)
Instance refers to a workload that is currently allocated and consuming resources (e.g. a running or suspended virtual machine)

Some of you may recall similar terminology back when we were writing the charter but our model ended up going in a different direction. The reason it's come back up now is that we're getting down to the details (like running instances vs the [possibly immutable] template from which they were started) and not using common language causes confusion from time to time.

In terms of how we model these things for cloud infrastructure:

Containers are like reservations (though the resources may or may not be actually reserved). If you create a blank server in VMware vCloud express for example there's an entity that you will be billed for regardless of whether you start it or even point it at an image. Similarly you can pay Amazon for a "reserved instance" and then get cheaper hourly rates for it. Think of it like a virtual dedicated server. These can be modeled via "empty" compute resources - that is, ones which have metadata such as allocated cores and memory, but no entity-body (e.g. OVF payload).
Workloads are whatever the user wants to run in your cloud. This could be anything from a script to a complex, multi-VM OVF file ("vApp" in VMware parlance). These are generally referred to as templates or instances:

Templates are resources that cannot be directly started (e.g. don't advertise start, stop, restart, etc. actions), rather needing a COPY to a new location as an "instance" first. Rather than having to reverse engineer the available actions these are identified by a predetermined "template" category.
Instances are resources that are allocated (e.g. can be started, stopped, restarted, etc.). These are the default and can be identified by the presence of an entity-body (e.g. OVF payload) and absence of the "template" category.

We discussed this on the call today and it wasn't contentious but if you have feedback then fire away,

Sam