Some people use Virtualdub with their analog capture cards because it lets them precisely control dozens of capture parameters (like interlacing) during the actual capture. It also permits certain filters (modifications) to be applied during capture as well.

I use it AFTER the capture because there many, many other filters that cannot operated in real time, but which can do amazing things to the video. My interests lie primarily in video restoration (old VHS footage, damaged video, etc.). Vegas has virtually no fX filters that are useful for this. By contrast, Virtualdub has dozens of spatial "cleaners," temporal cleaners, and chroma noise cleaners that make a significant difference in the viewability of the old video. There are also filters to remove logos which can be used on footage recorded off the air to eliminate those annoying station ID logos, and also to remove date/time stamps that just sit there and distract your viewing (works pretty darn well, too).

You can also perform simple script operations that operate on the video frame-by-frame. However, if you ever want to get into that, you should instead use AVISynth, which has a marvelous, although geeky, script language that lets you perform just about any operation you can imagine. For instance, you can take the odd field from the previous frame of video and combine it with the even field of this frame of video, and then do that over and over for the entire video. That sort of thing.

You can save each frame of video into a still image file, creating thousands of still images. You can also combine thousands of still images into a video file. You can do some of this in Vegas, but once you know Virtualdub, it is easier (I think) in VD.

If Sony could drum up some decent third party support for plugins, Virtualdub would be less interesting to a Vegas user. As it is, other than Satish's plugins, Boris, and a few others, there isn't much available, compared to Premiere. I complain about this every chance I get, hoping to make a dent in their thinking. Of course, maybe they'll get mad and kick me off the board ...