The article says that the JVM sits on top of a micro kernel, so I would assume that that micro kernel would provide a thin layer of abstraction for hardware and IO support such as file-systems. Its an interesting concept if you couple it with something like EC2 where you could throw out a bunch of Java VMs to do massive parallel processing of a data-set.

There are also many Java programs that do not use files or sockets; they use "the database", "the classloader", "the configuration class", etc.. With the details abstracted away, this JVM can replace those classes with custom implementations that have the same interface but are implemented without any OS support.

Note: I haven't watched the video or read the source code yet.