An Operating System is the software that interacts with the hardware of a computer system and works as the intermediary between all the applications and the hardware, which includes peripheral devices such as a printer, a computer mouse or a keyboard. When you run software, it transfers requests to the OS through an API (Application Program Interface) and the contact is done through a command line or a Graphical User Interface (GUI). A lot like a personal computer, web hosting servers also have an Operating System that acts as a host for all the software installed on them, which includes script apps or server-side software such as a flash server, a VOIP server, and many others. A virtual machine can be created on a physical one, so you'll be able to install a guest OS on it and have a different system environment in contrast to the physical server host OS.