I don't understand what the benefit of this is over installing OSs on separate partitions

 

Windows 11 – Dual Boot with virtual hard disk, without partitioning

 

Actually ther is not any.
I always preferred separate partitions real os, vhd does not need to be on separate partition, because it's a file, you can have many of them on the same partition provided you have enough space.
I think of it as a Windows proprietary VirtualBox.

 

There are obvious benefits. By partitioning, you need to back up the partition using proper tools; backing up a VHDx is a case of copying and a file for a backup (and compressing if needed to save space). The main benefit though is that VHDx uses the disk space dynamically.

For example, if you have a 500GB drive and use partitions as 250GB each, each OS will only have 250GB available. Using VHDx you can assign both OS' 250GB, but if the VHDx is only using 50GB, then that is all that's used and the other OS will still have full access to the remaining 450GB. If that 50GB then increases to 100GB, then it can increase dynamically as needed, and the other OS will reduced dynamically, e.g. from 450GB down to 400GB in this example.

Therefore, you do not 'lose' space in the same way, which would be a benefit for those with limited capacity on their drives.

And as previous post says, you could also have as many as you want, all using only the space they use instead of having to section off an entire partition, and have something like the below custom to your needs, all on a single drive and can be backed up by simply copying a file:

MAIN OS: Windows 11 24H2 Daily Driver
VHDx 1: Windows 11 23H2 Gaming
VHDx 2: Windows 10 22H2 DAW​

 

I dont know your PC's specs, but with today's SSD prices, I'd rather have one SSD for each OS.

 

the convenience of a partition now with the corruptibility of a file?