An Operating System is the software which interacts with the hardware of a computer and serves as the intermediary between the installed applications 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, web hosting servers also use an Operating System which 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, etcetera. A virtual machine can be generated on a physical one, so you can install a guest OS on it and have a different system environment in contrast with the physical server host Operating System.