An Operating System is the software that interacts with the hardware of a computer system and is the intermediary between applications and the hardware, which includes peripheral devices such as a printer, a mouse or a keyboard. When you run an application, it transfers requests to the OS using an API (Application Program Interface) and the contact 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 that acts as a host for any software installed on them, which includes script apps or server-side software such as a flash server, a VOIP server, and many others. A virtual machine can be set up on a physical one, so you could install a guest OS on it and have a different system environment in contrast to the physical server host OS.