For simplicity, the tooling often tries to make this simple and transparent to use.
https://docs.docker.com/desktop/faqs/linuxfaqs/#why-does-doc...
1. You only have to deal with one Linux distro in the VM. Managing things across many distros can be difficult at that level.
2. There are times you want to blow away your environment. Can't do this if things running on the host.
3. You'll want to controll the resources your workloads uses so they don't make the Linux desktop unresponsive. VMs provide that level of separation.
I could go on but you get the point. If you're a power user who wants it on the host you can do that. For the masses of this kind of product, a VM has a lot of advantages.
How does it work? Why is it fast?
OrbStack uses a lightweight Linux virtual machine with tightly-integrated, purpose-built services and networking written in a mix of Swift, Go, Rust, and C. See Architecture for more details.
It's a very interesting product, it does use a VM, but seems to have some "special sauce" code to improve the speed of things. It also says it shares the kernel among multiple VMs. Very cool stuff.
I found there is not much diffence in performance between both on my intel macbook.
I think it will not take long until rancher also updates to latest lima to support apple virtualization. but I haven't checked the latest release notes.