An Operating System is the software that interacts with the hardware of a PC and serves as the intermediary between all the applications and the hardware, which includes peripheral devices such as a printer, a mouse or a keyboard. When you run software, it sends 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 servers also feature an Operating System that functions as a host for all the software installed on them, including script applications 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 Operating System.