Parallels 12 - Hypervisor: Parallels or Apple?

From About Parallels Desktop system extensions on macOS Big Sur (and later), October 2020:

At WWDC20, Apple was quoted as saying that “System Extensions improve the reliability and security of macOS, and deprecated kernel extensions will not load by default in macOS Big Sur”. Eventually, to make Parallels Desktop fully compatible with the new macOS Big Sur 11.0, Parallels Engineering has gone through years of engineering work of rebuilding Parallels Desktop and its features using the new macOS system APIs. This extensive and time-intensive development resulted in the all-new Parallels Desktop, explicitly designed to work and integrate with new macOS Big Sur technologies, and at the same time, deliver performance and productivity improvements to benefit Parallels Desktop customers.

[... snip ...]

For now, our team continues to work on supporting both Parallels and Apple hypervisors and continues collaborating with Apple on implementing the rest of Parallels Hypervisor features to Apple Hypervisor. We recommend using Apple hypervisor, and if you notice any difference between Apple and Parallels hypervisors for your use case, please let us know.

(Emphasis mine)

TL;DR: Security changes in MacOS have motivated Parallels to build on top of Apple's native system APIs.

This post in Parallels Forum clearly states to use Parallels Hypervisor:

Hi, Apple hypervisor comes short of the following matters comparing to the Parallels hypervisor:

• Performance: slower on VM startup and shutdown

• Stability: may crash more frequently

• Functionality loss: no PMU, nested virtualization, thermal monitoring, energy profiling

Parallels Hypervisor is the best one.

By PaulChris@Parallels, a Parallels Support person.