Yes it does, but it's very transparent - until you run into a few things that make it obvious, eg if you disk-image size limits, or memory limits.

I work with a few people who believed it was native, and used it for quite a while, until things started going wrong and we logged in to the vm to fix them.

Kinda my point. The reason docker is popular is simply that most of the devs are lazy, not very knowledgeable in the actual underlying technology and very short-sighted.

And docker marketing has very effectively used that to their advantage.

Yes it is, but docker for desktop runs it for you. You could use LXD etc by running Linux yourself in a virtualisation solution of your choice like VirtualBox or VMWare.

Yeah, that's my point.

On Linux you are going to run docker in VM anyway if you care a bit about security, but I know that almost all devs run docker directly on their laptops and with the user's full access to docker - ie. their user effectively becomes user. Without second thought ...

* becomes root, of course