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In IT, a Hypervisor, also called virtual machine manager (VMM), is one of many hardware virtualization techniques allowing multiple operating systems, termed guests, to run concurrently on a host computer. It is so named because it is conceptually one level higher than a supervisory program. The Hypervisor presents to the guest operating systems a virtual operating platform and manages the execution of the guest operating systems. Multiple instances of a variety of operating systems may share the virtualized hardware resources. Hypervisors are very commonly installed on server hardware, with the function of running guest operating systems, that themselves act as servers.

The Core of the vSphere product suite is the Hypervisor.

Hypervisor is the virtualization layer that serves as the foundation for the rest of the product line of VMware.

In the latest version of vSphere (5), the hypervisor comes in the form of VMware ESXi.

Type 1 and Type 2 Hypervisor:

Hypervisors are generally grouped into two classes: type 1 hypervisors and type 2 hypervisors. Type 1 hypervisors run directly on the system hardware and thus are often referred to as bare-metal hypervisors. Type 2 hypervisors require a host operating system, and the host operating system provides I/O device support and memory management.

VMware ESXi is a type 1 bare-metal hypervisor. (In earlier versions of vSphere, VMware ESX was also considered a type 1 bare-metal hypervisor.) Other type 1 bare-metal hypervisors include Microsoft Hyper-V and products based on the open source Xen hypervisor like Citrix XenServer and Oracle VM.

In other words, Type 1 hypervisor runs directly on the hardware; a Type 2 hypervisor runs on operating system.

This is a significant difference from earlier versions of the VMware vSphere product suite. In earlier versions of VMware vSphere, the hypervisor was available in two forms: VMware ESX and VMware ESXi. Although both products shared the same core virtualization engine, supported the same set of virtualization features, leveraged the same licenses, and were both considered baremetal installations, there were still notable architectural differences. In VMware ESX, VMware used a Linux-derived Service Console to provide an interactive environment through which users could interact with the hypervisor. The Linux-based Service Console also included services found in traditional operating systems, such as a firewall, Simple Network Management Protocol (SNMP) agents, and a web server.