You mainly use
virt-manager to create virtual machines (VMs). You can also use it to create LXC containers, and when you use it in that way, you are asked in what directory to put the root filesystem of the container. If you select / as the directory, then the LXC container will have the same root filesystem with your Linux installation. It is not a typical thing to do, because with containers you want to separate their filesystems from your host’s filesystem. That is, just select a subdirectory instead.
The difference between Virtual Machines and containers, is that with Virtual machines you boot a separate new Linux kernel for each VM. With containers, you reuse the running Linux kernel of your Linux distro.
There are two main types of containers, the application containers and the system containers.
People use Docker to create application containers, and the idea is that in the container you run one application.
On the other hand, system containers look and feel like virtual machines, but in fact they are made of containers. The advantages are that they need much less resources than VMs, it is much faster to manage them and are more versatile.
In this discussion forum, we focus both on LXC (standard Linux Containers) and LXD (much easier to use and better packaged Linux containers).