I have a question about type 1 and type 2 hypervisors. Type 1 runs on the bare metal, and then the end operating systems are installed on top. This seems to me like the most logical way to build a virtualized environment.
But there's type 2 where a base OS has to be installed first, then the hypervisor, then the end operating systems needed. I don't understand why anyone would go through the trouble of using a type 2. Are there any use cases that justify needing a base OS as it's done in type 2?
Type 2 hypervisors are rather useful, though not commonly in mainline production environments. A T2 hypervisor such as VMWare Workstation can have the ability to produce Virtual Machines that are instantly useable on the T1 version (ESXi) just by uploading the right files, which makes it very handy for VM prototyping.
As a class though, T2 hypervisors are much more commonly used on devices not dedicated to the Virtual Machine Host role. Devices like development stations, or personal-use devices (need Windows once in a while, but only run OS X / Linux? A T2 hypervisor is perfect).
The one area where Type 2 hypervisors are common in production are the "OS Zones" type of VM. This creates multiple virtual machines of the identical OS as the host operating system. Some don't call this a true hypervisor since all OS instances are using the same kernel, but it is still an important virtualization technique. The VM penalty is usually very low for this style of VM.
Type 2 hypervisors like for example Oracle Virtual Box are great for developer environments where access to multiple operating systems and their variants is required.
The bare metal hypervisors have some advantages. They take up very little RAM, are relatively fast to reinstall when needed, and they are highly optimized for running virtual machines - that's all they can do.
Type 2 hypervisors have some advantages too. The main one being driver support. Most bare metal hypervisors support only certain hardware. They are also very picky about what storage mediums can be used to host VMs. T2 hypervisors can take advantage of any hardware the full OS has drivers for. It can also make it easier to do things like monitoring or backups from the host OS.