There are multiple reasons one would want to rely on virtual machines extensively, or even exclusively, an approach championed by Phyllome OS. Let's list some significant advantages of this approach, but also cover severe limitations.
A software-based/backed computer, or simply a virtual machine, has many advantages over a silicon-based computer:
Relying on a virtual machine as its primarily personal environment comes with several limitations in comparison to using an operating system installed on the hardware (aka known as bare-metal computing). Some of these limitations will be tackled or greatly mitigate one day, others might not.
Performance overhead. Phyllome OS requires resources to run, resources that will not be accessible to guest operating systems.
Suboptimal guest performance. In most cases, running a virtual machine instead of using the physical hardware directly will come with a performance penalty.
Limited out-of-the box hardware support: hardware-assisted virtualization is available on many computers, but rarely activated by default and not always correctly implemented. Users remain at the mercy of good platform firmware and may have to explicitly activate hardware-assisted virtualization in the BIOS/UEFI. Hardware components are often not correctly isolated in IOMMU groups.
Limited features set. Some operating systems are designed to leverage hardware features that may not be accessible to an operating system installed on a virtual machine, or that would require specific developments to be taken advantage of (i.e: a Bluetooth dongle; a Near-field communication chip; etc.)
Increased general complexity. Instead of running just an operating system on top of some physical hardware, any Phyllome OS user would need to manage it as well as their primarily guest operating system. As a result, it might be more difficult to troubleshoot an issue, and it will add a pile of code that the user has to trust.
Decreased general usability. Any physical device attached to a computer won't automatically be made to a guest virtual machine. For some users, it might be considered a hindrance. Phyllome OS relies on Linux drivers. Not all hardware fully supports Linux well, which may force users to rely on device or controllers passthrough. Finally, the use of Phyllome OS will certainly greatly reduce a laptop's battery-life over running a single system.
Lack of guest systems' integration. Phyllome OS provides an optimized virtual machine model tuned to host modern operating systems, but, at the exception of some RPM-based guests operating systems including Phyllome OS itself, does not intent to provide automated ways to deploy guest operating systems (at the moment, Infrastructure as code solutions or instance initialization software like cloud-init do not seem generic enough to satisfy every modern desktop-based operating systems' idiosyncrasies). In other words, contrary to end-to-end operating systems like Qubes OS or the upcoming Spectrum, which are offering ready to use templates or/and applications isolated in virtual machines by default, Phyllome OS delegates to end-users the task to install their favorite operating system, while trying to provide the best possible underlying defaults for each operating system. In this regard, its model is closer to Proxmox, which doesn't make assumptions about how a guest operating system will be deployed.