Virtual Families runs in true real-time, meaning that when the player’s computer is shut off, the game continues to progress, with the family members evolving and growing, based on what the player has taught them, even when no one is interacting with them. The game is set in bucolic suburbia and features a gorgeous hand-drawn scrolling map with a house and garden. It employs sophisticated artificial-intelligence and a varied selection of characters with quirky personalities to adopt and take care of.

There are various hurdles that appear throughout Virtual Families, from moral dilemmas - including whether or not to keep a package that was inadvertently delivered to your home, or if you should send your daughter to Paris for a modeling contract - to real-life situations such as illness, allergies, promotions and chores. Also included along the way are mini-puzzles, where family members have to find hidden objects throughout their home and garden, and trophies that can be acquired after reaching various goals throughout their journey.