Read the attached PDF to learn how Juniper's Ramanathan Sethuraman and Thiyagarajan Devendiran implemented nested virtualization with Contrail. Generally type-1 hypervisors are designed to run on-top of a bare-metal x86 machine, with a processor that supports virtualization, e.g. Intel VMX and AMD SVM. Using this, you can make a physical machine run multiple virtual machines on-top (using associated components like qemu and libvirt).
Thanks a lot for the nice document.