Virtualenv gives a clean working environment for python project. To understand virtualenv, we need to understand how python works,

• When you execute python binary in command line,
  • It implicitly read site.py (defaults to /usr/lib/python$version/site.py)
  • Sets sys.prefix and this sys.prefix(platform independent packages) and sys.exec_prefix(platform dependent packages)
  • Sets sys.path and these variable decide where the packages will go.

• How it sets sys.prefix (in-order to precedence) ??

  • Check for PYTHONHOME variable, if this variable is set than value of $PYTHONHOME is sys.prefix and all packages will go in that directory.
  • Look for landmark(in python’s case os.py file) lib/python$version/os.py and where it finds this relative path structure that is sys.prefix
  • Else whatever value is fixed during compile time.
• A simpler of virtualenv will do is:
  • copy python binary in your project location(e.g. LOCATION=/home/user/PROJECTDIR/bin)
  • you need to have directory structure like $LOCATION/lib/python$version/os.py
  • python/pip binary at $LOCATION will put all those packages to *$LOCATION/lib/python$version/site-packages/ *.

• What bin/activate does:  It calls your copied python/pip binary instead of system binary, so that it sets sys.prefix to your specified directory and install packages over there.

• By default python puts packages to global location i.e. /usr/lib/python$version/site-packages

• To find sys.prefix use: python -c "import sys; print sys.prefix"

Reference: http://pyvideo.org/pycon-us-2011/pycon-2011–reverse-engineering-ian-bicking–39-s.html