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Managed code is a term coined by Microsoft to identify computer program source code that requires and will only execute under the management of a Common Language Runtime virtual machine (resulting in bytecode).
This disambiguation is prevalent and only relevant when developing applications that interact with the .NET Framework or other Common Language Runtime (CLR) implementations, like Mono. Since many older programming languages have been ported to the CLR, the differentiation is needed to identify managed code, especially in a mixed setup. In this context, code that doesn't rely on the CLR is termed unmanaged.
Microsoft's Visual C++ development environment can produce both managed code, running under the .NET CLR, or compiled binaries, running directly on the Windows platform with the help of its C++ Runtime Library.
Benefits of using managed code include programmer convenience (by increasing the level of abstraction, creating smaller models) and enhanced security guarantees, depending on the platform (including the VM implementation). Drawbacks include slower startup speed (the managed code must be JIT compiled by the VM) and generally increased use of system resources on any machine that is executing the code.
There are many historical examples of code running on virtual machines, such as the language UCSD Pascal using p-code, and the operating system Inferno from Bell Labs using the Dis virtual machine. Java popularized this approach with its bytecode executed by the Java virtual machine.
Another source of confusion was created when Microsoft started connecting the .NET Framework with C++, and the choice of how to name the Managed Extensions for C++. It was first named Managed C++ and then renamed to C++/CLI. Bjarne Stroustrup, creator of the C++ programming language and member of the C++ standards committee even commented on this issue, "On the difficult and controversial question of what the CLI binding/extensions to C++ is to be called, I prefer C++/CLI as a shorthand for "The CLI extensions to ISO C++". Keeping C++ as part of the name reminds people what is the base language and will help keep C a proper subset of C++ with the C++/CLI extensions."