Compare Type 1 and Type 2 hypervisors.

Type 1 (bare-metal) runs directly on hardware, acting as minimal OS: VMware ESXi, Xen, Hyper-V. Better performance, security, used in data centers. Type 2 (hosted) runs on host OS as application: VirtualBox, VMware Workstation, Parallels. Easier setup, uses host drivers, more overhead. Hybrid approaches exist: KVM is kernel module making Linux a Type 1. Para-virtualization requires guest OS modification for efficiency. Hardware virtualization extensions (VT-x, AMD-V) improve both.