An Operating System is the software which interacts with the hardware of a computer system and serves 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 transmits requests to the OS through an API (Application Program Interface) and the interaction is done through a command line or a Graphical User Interface (GUI). Similar to a personal computer, hosting servers also feature an Operating System that functions as a host for all of the software installed on them, which includes script apps or server-side software such as a flash server, a VOIP server, etc. 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 to the physical server host OS.