Mac – Difference between Virtual Machine and a Hypervisor

As far as I know:

• There were studies on the possibility of an "undetectable rootkit" where a malicious hypervisor would sit between your computer and the hardware. Security firms (and CPU vendors) were enraged that someone devised something like that and told no one could detect it, so they actually came with a way using timing functions and comparing the results with an external source. So virtualization is almost undetectable, but if you pay really close to small details and you have an external reference, there are ways to figure out you're being virtualized. It shouldn't cause any incompatibility, though.
• It's not. Your virtualized CPU doesn't have the same capabilities your physical one has. The Intel virtualization instructions are available only to the host OS, for instance. That doesn't mean, however, that you cannot have a virtual machine inside a virtual machine: it just means it's gonna be damn slow.
• OSes don't have to be adapted for virtual machines. It rather goes the other way around.
• Yes, they are to some extent. Software virtualization will always work. Hardware virtualization usually isn't transitive (guest OSes can't use hardware virtualization to host more guest OSes).
• There must be more to that, but I think that's a good start.

The main difference between all those solutions is the same reason as why there are so many car companies - it is a big market and everyone thinks they can do it better.

As for your comparison points, everyone will give different answers. Typically, if you just want to mess around and know what you are doing, I would recommend Virtual Box. If you want to do more advanced things, I would recommend VMWare Workstation, if you do not know what you are doing, but just want to virtualise, I would recommend Microsoft Virtual PC.

Qemu is not virtualisation, it is emulation. this means it is slower, but it has its moments and its niche that other products do not fit in to.

As for your direct points:

Virtualization

The process of running a machine virtually, this is the general name of the topic.

Virtual Machine

A name for a single machine that runs virtually on a host.

Hypervisor

A hypervisor is a virtualisation technology which allows for the greatest performance by attempting to run as thin as possible on top of the bare metal hardware.

Paravirtualization

This term is very awkward and is subjective to different people. Typically, most modern virtualisation technology, even those that use a Hypervisor also use paravirtualisation for a few hardware components (e.g. networking controller.). My definition (which I am happy to be corrected on) is presenting virtual hardware which is different to the physical hardware it is actually connected to.

Hardware Virtualization

(typically) Support for virtualisation is built in to the processor directly which increases the performance. For example, in the early days of virtualisation, it was performed via emulation which has extra overhead. Hardware virtualisation is basically a bunch of "shortcuts" inside the processor that allow virtual machines to run a lot faster - in some cases, almost at the same speed as a native machine.

I hope this helps!