Type 2 hypervisors are the best choice for development purposes while Type 1 hypervisors are preferred for production. In my opinion the main reason for Type 1 being preferred for production environments (even for small production environments) is that Type 1 hypervisors are easier and faster to install in case it is needed.
The three most common hypervisors are VMWARE, HYPER-V, and CITRIX. There are also some open source options.
Here is a video wich explains the difference between Type 1 and Type 2 supervisors.