A virtual machine is a program that runs in a “host operating system”, kind of like Microsoft Word running in Microsoft Windows. In this case, Microsoft Windows is called a “host operating system” because it supports the application program Microsoft Word.
However, a virtual machine is a special kind of program. It emulates a PC. It emulates a PC with some RAM, a hard disk drive, a CD-ROM drive, network cards, a video card, a sound card and etc. That is why a program that creates a virtual machine is also called a PC emulator, as it “pretends” to be an PC that is independent of the machine that is actually running the program.
Because a virtual machine is in every respect pretending to be a real machine, it also means that you can install any suitable operating system on a virtual machine, regardless of the host operating system. You can, indeed, install Linux in a virtual machine that runs in Windows as a host operating system. In this case, Linux is called a “guest operating system”. The reverse is possible, as well, to have a virtual machine running Windows while the emulator runs in Linux.