Fedora and Ubuntu both provide compact cloud images that are useful for spinning up small VM's quickly (much quicker than installing from a huge ISO or even net-install).
Both these pages have single-click buttons to simply launch the VM's at Amazon, which is very cool. However, you may have reason to use them "offline" with a local KVM (outside of EC2 or OpenStack) for testing, or on a plane, etc. I didn't find a lot of information on this (although it is all available once you know what you're looking for).
So here's my quick guide for the complete newbie. Firstly, download your image of choice and put it in /var/lib/libvirt/images. Open up virt-manager and you can create your new VM via "import existing image".
You can try booting it, but the problem you'll hit is the images have no default password or way to log-in because, very sensibly, you're expected to inject that. Booting you'll see cloud-init attempting to contact 169.254.169.254 to collect the meta-data to initalize the VM; eventually it will time out and you're left at a login prompt you can't log in at. cloud-init does many things and is very flexible with lots of different plugins to initialise images in various ways. The particular one we're interested in is the No cloud plugin. This will look for data from a locally attached CD drive, which works very easily for this scenario.
Now that you know that's what you're looking for, the instructions are fairly clear; I'll repeat them just for clarity. Firstly you want to create a minimal meta-data file that has a host-name and an instance-id:
$ cat meta-data instance-id: iid-local01 local-hostname: myhost
Modifying the instance-id will signal to cloud-init that it should run again because something changed. This is also where you can put static IP address data; see the documentation.
Secondly, create a user-data file that has the commands to enable password login; set a password, and inject your ssh public key so you can easily log-in:
$ cat user-data
#cloud-config
password: mypassword
ssh_pwauth: True
chpasswd: { expire: False }
ssh_authorized_keys:
- ssh-rsa ... foo@foo.com (insert ~/.ssh/id_rsa.pub here)
Note for new players: that #cloud-config isn't an optional comment, it's a directive. If you leave it out, you'll probably see a little something about Unhandled non-multipart userdata starting... and your changes won't apply.
Insert those two into files into an iso:
$ genisoimage -output init.iso -volid cidata -joliet -rock user-data meta-data
Then copy init.iso into /var/lib/libvirtd/images as well, and connect that as a virtual-cd drive to your virtual-machine created from the image.
When you boot you should see some output as it injects your key. It should get an address via DHCP and then you should be able to log-in with fedora or ubuntu users. Then you can start getting more complicated with things like static addresses, package installations, running commands, etc by reading the documentation.