Mirrors work by changing the direction that light is moving. In a concave mirror, the light gets reflected towards the center. In a convex mirror, the light moves away. To make an image, we can trace a few rays that the light makes and see what happens to them.
Let's start with a concave mirror. If the object is far away, the light rays come in, and then bounce and come back together. See the picture below. This is an example of a real image.
(Whoops, link lost, but see follow-up for picture.)
If the object is very close to the concave mirror or you use a convex mirror, the light doesn't come back together. However, if you look at the light that comes off of the mirror and trace it back while pretending the mirror isn't there, they will come back to a point. This is called a virtual image.
(published on 12/12/11)