My suspicions are that it's a hypervisor used for security similar to what is used in their Xbox to maintain code execution and prevent rootkits.
The virtualization seems to be related to core isolation, memory integrity protection, system management mode and probably integrates with Secure Boot and TPM.
These technologies most likely use a hypervisor in the kernel to maintain code integrity, except this creates a dangerous precedent that could lead to hackers compromising the hypervisor. In the event this actually happens, the hacker would be presented with an OS that is already bluepilled with the hypervisor having FULL control over Windows and likely the entire system (EFI?).
Xbox 360 Hypervisor was compromised even though it was extremely secure, so hopefully this is designed more around the newer generation of Xbox security, but even then, newer generation Xbox's are built on Zero Trust SoCs. Most current generation PC's don't use SoCs yet, unfortunately, meaning most Secure Boot and TPM implementations utilize an insecure, but trusted BUS.