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Aristotle argues that the greatest good a human life can achieve is happiness, which is achieved through virtuous human activity. Happiness goes beyond the experience of pleasure as only animals strive for the goal of pleasure while rational humans have higher goals to reach. Happiness is any end result that's sufficient in and of itself. In other words, happiness is desired only for its own sake, not for the sake of something else, and all other goods are desired for the sake of happiness. Aristotle chooses not to clearely define virtue; he instead chooses to address an audience who has already "been brought up in good habits"--such as temperance, justice, and courage (Bk 1, Part 4; "Aristotle's Ethics: Methodology"). In other words, Aristotle already expects his audience to understand the difference between virtue and vice, and instead, chooses to argue that in general, a virtue is any rational trait that allows a person to live well by acting well through activity which leads to happiness. In order to define living well, Aristotle gives us the example of a flutist. A flutist who can play the flute well would be what we call a good flutist. Playing the flute well would also be the flutist's unique activity, and if that activity is done well, it's done in accordance with virtue plus it leads the flutist to happiness.
Therefore, for Aristotle, virtues are that which lead to beneficial human activity, and so long as this activity is done only for its own sake and not with any other goal in mind, this activity will lead to happiness, which is the greatest end, the greatest good. It's also important to Aristotle to point out that virtue stems from the rational mind rather than from the animalistic self.
As Aristotle phrases it:
Human good turns out to be activity of soul in accordance with virtue, and if there are more than one virtue, in accordance with the best and most complete. (Bk. 1, Part 7)
In other words, a happy, prosperous human life is a life that is lived with accordance to virtuous, rational activity achieved for the sole purpose of being good activity in and of itself, which leads to the ultimate end of happiness.
In short, virtue fits in with Aristotle's picture of human life by being the rational means through which we achieve the greatest activity, activity leading to ultimate good, happiness.
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