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Over the years, computers have become sufficiently powerful to use virtualization to create the illusion of many smaller virtual machines, each running a separate operating system instance.
There are several kinds of Virtual Machines (VMs) which provide similar features, but differ in the degree of abstraction and the methods used for virtualization.
Most of them accomplish what they do by emulating some real or fictional hardware, which in turn requires real resources from the Host (the machine running the VMs). This approach, used by most System Emulators (like QEMU[U1], Bochs[U2], ...), allows the emulator to run an arbitrary Guest Operating System, even for a different Architecture (CPU and Hardware). No modifications need to be made to the Guest OS because it isn't aware of the fact that it isn't running on real hardware.
Some System Emulators require small modifications or specialized drivers to be added to Host or Guest to improve performance and minimize the overhead required for the hardware emulation. Although this significantly improves efficiency, there are still large amounts of resources being wasted in caches and mediation between Guest and Host (examples for this approach are UML[U3] and Xen[U4]).
But suppose you do not want to run many different Operating Systems simultaneously on a single box? Most applications running on a server do not require hardware access or kernel level code, and could easily share a machine with others, if they could be separated and secured...