Correction!
"Parallels is best known for its virtualization tools for the Mac desktop"
Should read
Parallels is best known for its C$@9y virtualization tools for the Mac desktop.
There doesn't that feel better!
Parallels has introduced a bare-metal hypervisor for servers built by the Jobsian cult. The Apple-happy virtualization outfit unveiled Parallels Server for Mac Bare Metal Edition, which lets you run virtual machines on Jobsian servers without a host OS - i.e. on the server's "bare metal." The company's existing Xserve product …
... Virtual Intelligence Ventures
"“Parallels Server for Mac Bare Metal Edition provides a high performance solution that enables IT professionals and developers to capitalize on the power of Mac OS X Server while having the flexibility to run Windows and Linux workloads both on-premise and through the Cloud,” reads a canned statement from chief executive Serguei Beloussov." ...... WOW. Nice canned statement from Serguei Beloussov.
Apple are getting Adventurous.
Actually yes - though I wouldn't claim that they are anything but niche ! In an environment where you're supporting Apple desktops, an Apple server makes a sensible choice. Last time I looked, they weren't actually badly priced compared with other brands, but the biggest issue is the lack of variety (you get one size, max 3 storage bays, etc) and that limits you if you want something with different options.
I ran two at my last job (design dept all Mac), and we've one customer (in design/print, all Mac) running one.
Actually, now that apple's OS runs on commodity x86 platforms, it is quite trivial to "port" both the OS and VMs to "non apple hardware".
The incompatibilities which exist are 1) licensing and 2) deliberate technical impediments.
As for the technical impediments, those can be overcome as psystar and others have shown.
It will be news when Apple modifies their licensing to support non apple hardware.
"Is this still a virtual machine?"
Yes.
"How is it virtual?"
OSes running under the hypervisor think they are running on the bare metal, while in fact the hardware is managed by the hypervisor. The hardware is fully virtualized.
" When it runs on a machine without OS, shouldn't it be called an OS?"
It is an OS I think, but "OS" is a pretty generic term. A type 1 hypervisor runs on the bare metal, but instead of providing ordinary OS services provides virtual machines that run guest OSes.. A type 2 hypervisor is where you run an app, and that app provides a virtual machine running a guest OS.