z boxes use a flavor of VM to run all the LPARS and allocate memory and devices. z/OS, z/VM and Linux all run as VMs.
Then there's CMS which runs under VM; theoretically it could run as an LPAR, but I've not seen that as running DIAGNOSE (VM system call) to the LPAR hypervisor could be disruptive. It would be interesting to drop DIAGNOSE into a z/OS environment, but I suspect it would be intercepted.
I much prefer z/VM to z/OS as a development environment. At one shop, I developed products under VM for deployment under both VM and MVS.
Many early S/360 installations ran 7070 and, I guess, 1401 emulators.
Eventually with VM, the SIE (Start Interpretive Execution) instruction appeared. A form is running LPARs.