VMware virtualization works by inserting a thin layer of software directly on the computer hardware or on a host operating system.

This contains a virtual machine monitor or ?hypervisor? that allocates hardware resources dynamically and transparently.Vmware
Multiple operating systems run concurrently on a single physical computer and share hardware resources with each other.

By encapsulating an entire machine, including CPU, memory, operating system, and network devices, a virtual machine is completely compatible with all standard x86 operating systems, applications, and device drivers.