It isn't virtualization as there is no VM server. It mounts a Windows
compressed file as a drive using a loopmounted boot device. It may sound
picky, but there is no virtualization and as such there is no slow down in
performance. It also does not need Windows other than to install it and
remove it. When you boot in to Ubuntu using Wubi then you are 100% Linux.
BTW, if you use Wubi then it is agood idea to defrag your drive first or the
performance will be bad.