Artificial life (ALife) is the study of life and evolution as abstract computational processes. The name *virtual life* probably makes more sense, since we're not talking about the construction of artificial biological life. The primary goal of the field is to design a computer program that demonstrates certain essential characteristics of life and/or natural evolution (nobody is certain *which* characteristics). Of course, for this to be possible, we have to put some faith in the extended Church-Turing thesis, which states that all finite physical systems can be simulated by finite computers; see [[Computation and physics]].
It's important to understand that ALife doesn't necessarily entail simulating physical processes like chemical reactions. There are many, myself included, who believe that life might be a fundamentally mathematical or computational process. What I mean by that is: suppose you have a wave in some medium, let's say ripples on water. That wave propagates according to the differential equation known as the *wave equation*, which I won't bother to reproduce here. The point of the wave equation is that I don't need to know anything about water molecules in order to determine the vertical displacement of the water at a particular point as a function of time. I just need the initial conditions and a constant that tells me how fast waves propagate in water. The same equation holds if the waves are propagating in alcohol, or even if they're electromagnetic waves propagating through free space. Waves are a kind of abstract *behavior*, not a physical thing, and I can understand them simply by studying the wave equation as a mathematical object.
The ALife point of view is that the relationship between life/evolution and organic chemistry is the same as that between waves and water: an abstract behavior implemented on a physical substrate. That's why you'll frequently see people studying programs that output their own source code, or cellular automata, or simplified, symbolic versions of chemistry based on term rewriting. The core questions: *are computers suitable as a substrate for life?* *If so, what is life's "wave equation"?*
[This article](http://www.cs.mun.ca/~banzhaf/papers/BanzhafMcMullin_Alife.pdf) provides a good introduction to the history and main ideas of ALife, and my favorite textbook on related topics is *Artificial Chemistries* by Banzhaf and Yamamoto.