Type 1 versus Type 2 Hypervisors
I have always found the difference between Type 1 vs Type 2 hypervisors rather uninteresting. In short, a type-1 hypervisor is a hypervisor that has direct access to the hardware, where a type-2 hypervisor executes inside an operating system. Most hypervisors are type-1 hypervisors, including IT hypervisors such as VMWare, Xen, KVM and such. Type-2 hypervisors are applications like VMWare Workstation (or Fusion), Parallels, …. The distinction between type-1 versus type-2 is really not as useful as most people think. There is a good blog article by Anthony Liguori that describes this as well, complete with references, the article is a bit old, but still correct.