How does Docker for Windows run Linux containers?
Docker for Windows still uses a Linux VM to run Linux containers. But instead of using Virtual Box (which is what is used with Docker Toolbox), the Linux VM is run using Hyper-V - a Windows-native hypervisor. This means that Docker for Windows ships fewer components and has less moving parts.
If you install Docker for Windows and run docker version you'll see that the Docker Linux daemon is running on "Moby Linux".