The hypervisor traps CPU instructions and mediates access to hardware controllers and peripherals. As a result, full virtualization allows practically any OS to be installed on a virtual server without modification, and without being aware that it is running in a virtualized environment. The main drawback is the processor overhead imposed by the hypervisor, which is small but significant.

In a fully virtualized environment, the hypervisor runs on the bare hardware and serves as the host OS. Virtual servers that are managed by the hypervisor are said to be running guest OSes.

Para-virtualization

Full virtualization is processor-intensive because of the demands placed on the hypervisor to manage the various virtual servers and keep them independent of one another. One way to reduce this burden is to modify each guest OS so that it is aware it is running in a virtualized environment and can cooperate with the hypervisor. This approach is known as para-virtualization.

Xen is one example of an open source para-virtualization technology. Before an OS can run as a virtual server on the Xen hypervisor, it must incorporate specific changes at the kernel level. Because of this, Xen works well for BSD, Linux, Solaris, and other open source operating systems, but is unsuitable for virtualizing proprietary systems, such as Windows, which cannot be modified.