An Operating System is the software which communicates with the hardware of a computer and serves as the intermediary between apps and the hardware, including peripherals such as a printer, a computer mouse or a keyboard. When you run an application, it transfers requests to the OS using an API (Application Program Interface) and the communication is done via a command line or a Graphical User Interface (GUI). A lot like a personal computer, hosting servers also use an Operating System that acts as a host for all of the software installed on them, including script apps or server-side software such as a flash server, a VOIP server, and so on. A virtual machine can be generated on a physical one, so you'll be able to install a guest OS on it and have a different system environment in contrast with the physical server host OS.