Operating system runs in ring 0. Modern processor inserts a ring -1 for the hypervisor to control access to CPU and resources.
Type-2 hypervisor sits on the top of an OS. The hypervisor core module - VMM (VM monitor) runs as a kernel driver. The main hypervisor and the guest OS runs in ring 1 or 3. This is called ring compression because the using less ring (4 rings to 3 rings) by the architecture. When a guest OS needs to do I/O, the request will be trapped by the hypervisor and pass onto the host OS via VMM. This caused some performance penalty.
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