Short answer: KVM (Kernel-based Virtual Machine) is the hypervisor built into the Linux kernel. A KVM VPS runs its own kernel, so it can run Docker, VPNs, custom kernels, Windows and BSD; container systems such as OpenVZ and LXC share the host kernel and are lighter but more limited.
KVM explained
KVM became part of the mainline Linux kernel in 2007 and is now the standard for VPS hosting. It uses the CPU's hardware virtualisation extensions to run complete virtual machines, each with its own kernel and virtual hardware.
OpenVZ, Virtuozzo and LXC isolate processes on a shared Linux kernel instead. They start instantly and pack more customers onto a server, which is why some budget plans use them, but you cannot load kernel modules, boot a custom ISO or run Windows, and Docker needs nesting support.
For almost every use today, prefer KVM; container plans make sense only for very small, cheap Linux workloads.
At a glance
| KVM | OpenVZ / LXC | |
|---|---|---|
| Own kernel | Yes | No (shared) |
| Windows / BSD | Yes | No |
| Docker | Yes | Only with nesting |
| Custom ISO | Yes | No |
| Overhead | Slightly higher | Lowest |
See it in the data
Frequently asked questions
Is KVM better than OpenVZ?
For flexibility and compatibility, yes: KVM supports any OS, Docker and custom kernels. OpenVZ is lighter and cheaper but Linux-only and restricted.