What does it mean to install a virtual machine on window server?
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It would generally refer to the practice of running a Type 2 hypervisor on top of Windows, with some kind of Virtual Machine running inside.
An example would be VMWare Workstation. You install the VMWare Workstation software onto Windows and then, within that, VMWare simulates another machine. For example, you may be running Windows 7 but choose to install Ubuntu inside.
This is very different to running a Virtual Machine on a Type 1 hypervisor, such as ESXi. ESXi is an Operating System in it's own right which you install onto your machine. However, you can't use ESXi for anything, you have to install a Virtual Machine on top of it.
One (rather confusing, but important here) exception here would be Microsoft Hyper-V. This comes with Server 2008 as an extra role but is actually classed as a Type 1 Hypervisor. Despite the fact that it's managed within Windows Server, it shouldn't ever be confused as a product like VMWare Workstation.
I'd suggest having a read of the following:
You may also choose to download a demo copy of VMWare Workstation. It's actually fairly straightforward to get started with and have a play.