What types of hypervisors do you know and how do they differ?

There are two main types of hypervisors:

1. Type 1 hypervisors (bare-metal) — operate directly on hardware without an operating system. They provide high performance and security as they control all host resources. Examples: VMware ESXi, Microsoft Hyper-V, Xen.

2. Type 2 hypervisors (hosted) — run as an application within the host operating system. They are easier to install and use but have lower performance due to an additional OS layer. Examples: VMware Workstation, Oracle VirtualBox.

The main difference is the level of interaction with hardware and performance: Type 1 is closer to the hardware, Type 2 runs on top of an OS.