KVM is also nice because you can continue using that machine as a regular desktop as well, if you need to do so. (Can't do that with VMware, Hyper-V or XenServer).
No one expects to use their Type 1 hypervisor as a desktop.
What? Tons do. Both KVM and Hyper-V are very popular for exactly this.
No. . . very few people say "I'm going to install Hyper-V and use it as my daily driver on my Dell Server" no one does that.
Actually a HUGE number do. It's insanely common for developers especially and IT folk. It's hard to state how common this is.
Have you never heard of the desktop virtualization market? This is a totally normal thing. Nearly everyone I know does this, both IT and dev and loads that are neither.
The only reason I don't use Hyper-V for testing is because we get VMware Workstation for free as a partner; I used VirtualBox for a long time when Hyper-V on Windows 7 couldn't create virtual machines, just to test out a few things or use it as a place to keep up-to-date images which I could capture later for deployment without using any additional server resources.
Type 1 definitely runs better as it doesn't stack the hypervisor on top of the OS, but I definitely don't see VMware Workstation going away.
I can see a couple niche things about VMware Workstation though; of course, there is more to add to the list. 1) Many that don't use it to push new configs to their VMware environment; if it's just being used as stand alone for some VMs, you could use literally anything else (and many are free obviously). 2) Nested virtualization to test clustering, site replication, etc while not needing to buy really expensive hardware.