You can call them games or virtual worlds depending on how you want to treat them. Games are set in virtual worlds, but virtual worlds are not necessarily about playing a game.
Second Life, from all the things I've heard about it, is literally having a second life, one that is lived online. I wouldn't call it a game but of course some people can wander around in it like a game. I would call it a social world where you can choose what you want to look like and do whatever. However, things like clothes for your avatar, or furniture for your online residence are paid with real money. The software is free if I recall correctly, but everything else, for customization or to be cool, will cost you.
Of course, this means that if you are innovative and creative, you too can cash in on Second Life, set up shop, sell stuff you designed yourself etc. There are people making money selling virtual estates in Second Life. I saw on a documentary that there's a guy who opened a disco in Second Life and is living off those earnings.
People probably use games like Second Life as a means to escape from the real world and just take a virtual vacation of sorts.
Playing MMORPGs like Everquest or World Of Warcarft is very similar, but RPGs require a lot more work and has more specific goals. Thus most people are in there to game, not start a relationship, even though it can happen during the course of questing together. The line blurs..
Sim City and The Sims (and other sim games) are more like sandbox worlds where you can safely experiment with systems. They would go under the games category. Those two you named are the most popular and also the most complex. You don't need to know how everything works to play them, you can just do whatever and see what happens next. The Sims is just hilarious. Sim City 4 is just simply beautiful and so satisfying to watch your city grow and populate itself. There's more fun stuff with Sim Tower and Sim Farm, and they aren't so taxing at the end of a busy day imho, and they are worth picking up too if you can find them, in budget piles nowadays.
