Virtualenv is a tool to build isolated Python environments. It's a great way to quickly test new libraries without cluttering your global site-packages or run multiple projects on the same machine which depend on a particular library but not the same version of the library.
You can, for example, install version X of a library in one environment and version Z of the same library in another environment, without one interfering the other. Each environment provides its own Python executable and site-packages directory (which is not shared between environments).
$ easy_install virtualenv