I'm sort of oversimplifying it (and probably forgetting a piece or two), but all that's needed is MMU, some minimal network subsystem with device drivers for network cards, and some very tiny VFS - just enough to handle the initrd-like thingy (the rest would be networked storage handled at the application level). E.g. if all we're going to ever run is a single VM that has its own ideas of processes and signals, we may not really need any full-fledged process scheduling or IPC, just the bits to support kernel's own threads.