The hydraulic behavior of soil is determined by the spatial heterogeneity of its hydraulic properties. The interplay among parent material, pedogenesis, and tillage leads to characteristic structures in cultivated soils. Tillage-induced features like a loosely aggregated seed bed, a compacted plow pan, and soil compaction beneath tractor ruts overlay natural features such as facies and horizons. Assessing the impact of such structural components on vadose zone hydrology requires an observation scale of several meters and a resolution in the range of centimeters, which is not feasible with experimental setups. An alternative solution is the generation of synthetic but realistic structures and their hydraulic properties as a basis for modeling the hydraulic behavior in response to different boundary conditions. With such “virtual soils” at hand, comparative studies are possible that help explore the relation between soil architecture and soil function. We developed a structure generator that provides great flexibility in the design of virtual soils with nested heterogeneity. Virtual soils with increasing complexity were generated to explore scenarios of precipitation and evaporation for a period of several months. The simulations demonstrated that the structure and the hydraulic properties close to the soil surface originating from tillage clearly govern atmospheric boundary fluxes, while the impact of heterogeneity on groundwater recharge is more complex due to threshold effects, hydraulic nonequilibrium, and the interaction with atmospheric forcing. A comparison with one-dimensional, effective representations of these virtual soils demonstrated that upscaling of soil water dynamics becomes inaccurate when lateral fluxes become relevant at the scale of observation.