Any graphical, virtual representation of a sophont that interacts in virtual reality - a virtual body.
If the avatar is a representation of a biont or other embodied sophont, it may or may not resemble the physical form of that sophont. There is an ancient tradition practiced by some modosophonts in which ey choose an avatar that is physically quite dissimilar from eir normal self; ey might choose to appear as a different species, sex or gender while interacting in virtuality. Other sophonts deliberately choose avatars which closely resemble their embodied selves.
Virtual entities who, by definition, do not have physical bodes may choose any shape they wish; but many prefer to adopt a small range of distinctive and easily recognised avatars.
Religion
Incarnation of God or a god in human or other modosophont form.
In Brahmanic-based religion, an embodiment or a bodily manifestation of the divine, from the Sanskrit Avatara which means "descent", i.e. the descent of the divine into human form. Original Hindu mythology was full of stories of avatars (Rama and Krishna were the two most popular) and their various exploits and past-times.
Interplanetary Age religions like the Universal Church, Wider Christianity, and New Bahaism - often based on integrating Indian insights with Semitic religions - referred to classical or Industrial Age prophetic founders like Christ or Baha'ullah (and later, Mohammad in some heterodox and Sufi-based forms of the Stellar Umma) as "avatars of God". Many Nuage and neo-nuage sects and cults each had their own (usually baseline, more rarely Superior) human avatar (often shown by objective analysis to be an exploitative fraud). Also, genuine religious founders throughout history frequently found themselves considered avatars by their followers, but they generally did not encourage such claims.