A Type 2 hypervisor functions as an application installed on an existing operating system rather than running directly on the physical hardware. This allows for the creation and management of virtual machines (VMs) that operate independently of the host system, making it a flexible solution for testing and development environments where maximum performance is not critical1234. References: * Implementing and Operating Cisco Service Provider Network Core Technologies (SPCOR) training5. * AWS's explanation of Type 1 vs Type 2 Hypervisors1. * OpenClassrooms' exploration of Type 2 Hypervisors2. * Red Hat's overview of hypervisors3. * JBS's insights on Type 2 Hypervisor efficiency4.