The main difference between Type 1 and Type 2 hypervisor is that Type 1 hypervisor runs directly on the host’s hardware while Type 2 hypervisor runs on an operating system similar to other computer programs.
Type 1 hypervisor is called a Bare Metal Hypervisor or native Hypervisor. Type 2 Hypervisor is called a Host OS Hypervisor.
Example:
Type 1: VMWare ESX/ESXi, Hyper V etc.
Type 2: VMWare Workstation, VirtualBox, Parallels Desktop etc.