GLIDOS uses Windows NTVDM for emulation of everything with the games except 3DFX support which GLIDOS provides via OpenGLIDE.

OpenGLIDE is a 3DFX to OPENGL wrapper

VDMSOUND is obsolete, it's used to replaced NTVDM's shiity or nonexistent sound emulation. USE DOSBOX INSTEAD.

From that, given no previous familiarity with NTVDM, after a jump out to Google & Wikipedia, it sounds like the NT 32 bit versions of Windows uses that when a user starts a 16 bit process from the RUN command, and perhaps also to emulate the DOS prompt ("Command Prompt")?

yes that is the one.

NTVDM uses v86 cpu mode, which AMD purposely left out in their 64 bit extension to x86(no one would use this anymore! like the infamous 640k is all anyone will ever need claim,) and Intel followed suit(they assert AMD copied them, blah, blah, politics.) With no 64bit v86 mode and OSs having moved to 64bit, there's no more functioning NTVDM to run all that old software. I posted on vogons about a patent application I ran across by Microsoft about quickly switching between 32bit and 64bit modes, sort of like how qemu does its hardware acceleration for protected mode before Intel VT and AMD-V hardware virtualization. The hope being that one could use that 32<->64 fast mode switch to run v86 code from a 64 bit OS.