Virtual screening takes a fixed collection of real, often already-synthesized compounds and asks a model to rank them by how likely each is to bind the chosen target. The library is finite and known in advance, so the output is a shortlist drawn from that library — not a new molecule. The practical advantage is that anything highly ranked can usually be ordered or made, because it already exists in a catalog. The limitation is equally structural: if the library contains nothing that fits the target's binding pocket, no amount of ranking will produce a binder. Virtual screening is therefore a search over a bounded set, and its ceiling is set by the diversity of that set.
In practice the ranking is done by a scoring function — a model that estimates binding affinity from structure. Because that estimate is cheap compared with a laboratory assay, screening can be run over millions of compounds, and only the top-ranked fraction is ever tested. The funnel shape is the point: a huge input narrows to a small set of candidates worth real experiments.