An Operating System is the software that communicates with the hardware of a PC and serves as the intermediary between the installed applications and the hardware, which includes peripherals such as a printer, a computer mouse or a keyboard. When you run an application, it transmits requests to the OS using an API (Application Program Interface) and the contact is done through a command line or a Graphical User Interface (GUI). Just like a personal computer, web hosting servers also feature an Operating System which acts as a host for the software installed on them, including script apps or server-side software such as a flash server, a VOIP server, etc. A virtual machine can be set up on a physical one, so you'll be able to install a guest OS on it and have a different system environment in contrast with the physical server host OS.