Yes and no.
VirusTotal uses the scanning engines of several antivirus products. The scanning engine is the heart of an AV product, but there is much more than that to secure a system.
Good AVs take care that your system is up-to-date, monitor your system, e.g., for odd behaviour of programmes and block them if necessary, change settings to more secure ones, monitor browsers for injections and exploits, prevent autoexecution of removable media, etc. None of this can be done using VirusTotal.
Most malware nowadays is packed and decrypts only in memory. The scanning engines can detect those files, they have generic unpacking techniques, specific unpackers, emulation as well as the possibility to detect the stub of the packer. It is an arms race in who has the most advanced techniques to either detect or evade detection.
So the answer is, yes the engines on VirusTotal can detect packed malware, but not always, and Antivirus products do much better if not only the engine is used but the whole product.
Edited by Struppigel, 11 November 2016 - 04:30 PM.