VMs being located on the same physical server are still completely separated. Thus if any other VM crashes it will not affect your own VM. Such malware attacks or errors are very common happening with the VMs. With the help of a hypervisor, all the VMs stay protected from external attacks as well as from the internal attacks from other VMs.
Hypervisor in cloud computing is so mobile as there is no such physical attachment with the underlying hardware. It was so tough to migrate conventional applications as they were tied to the physical hardware. Whereas what is hypervisor in cloud computing? It is a floating virtual machine that can be easily migrated.
The Type 2 hypervisors that are also called hosted hypervisors is the real answer to define hypervisor in cloud computing. A Type 2 hypervisor separates the guest OS from the host OS.