Virtual reality is a computer generated, three dimensional environment, that a person will interact with using electronic equipment, such as a virtual reality helmet [Oculus Rift] or clothing with sensors.
Why haven't we had it sooner?
Simply put, we haven't had the technology until now. With the advances in screen technology thanks to the mobile industry, we now have access to ultra high definition screens to paint a 'prettier' picture than we could 10 years ago. Also, with the progression of motion tracking, like what we see with modern video games consoles [Nintendo Wii, Microsoft Kinect], virtual reality hardware can now track the position of a user and mirror those movements in a simulation.
For more information check out the VR wiki page here