WSL2 is architecturally designed to run under Hyper-V, so when you activate WSL2 on your machine, Hyper-V runs on bare metal and your Windows installation just becomes another VM running inside it next to the WSL2 Linux environment. Unfortunately this is imho not explained as well as it should be, because, while most of the time most people won't notice any difference, there is a measurable impact with regards to performance (in games, for example). It depends on your specific setup how bad it gets, and in most cases it's more of a theoretical performance hit than a noticeable one, but it is still there.