System Level VM were first developed during 1960s for mainframe which the hardware is expensive and differnt group of users wanted different OS. A single host hardware platform can support multiple guest OS simultaneously. At present, themost important features of System Level VM is to partition major software system securely.
Platform replication is the major feature provided by a VMM. The central problem is that of dividing a single set of hardware resources among multiple operating system envrionments. The VMM has access to and manages all hardware resources. When guest OS performs a privileged instruction, it is intercepted by VMM, checked for correctness and exectured on behalf by the VMM. All being done transparently.
One way to build system level VM is to have VMM sits on the hardware and the guest OS sits on top of the VMM. One disadvantage is that the original OS must be wiped out to install the VMM. Another disadvantage is that the VMM must contain device drivers becuase it interacts directly with the underlying hardware. An alternative is to build the VMM on the top of an existing OS. The installation is similar to an application and the VMM can use services from the existing OS. However, the performance will be hit as there are more layer. An example of hosted VM is VMware 2000)
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