Funny how vizinini only replies to some people and ignores others.
He knows what P2P means. He knows what dedicated means. We all do. We also know what a VM is (please stop using hypervisor - it's not relevant even if it does sound impressive).
Viz you're wrong. What you just described is p2p. Dedicated servers mean servers hosted remotely. In Microsoft's case they have datacentres in Ireland and Amsterdam (IRRC) serving Europe. The new XBL dedicated servers are NOT hosted on local consoles.
You are also mistaken about your understanding of what P2P is.
It is a specific way of handling computer communication. Just because a Quake 3 game was hosted(server) on a player's PC(that was also a client), didn't make it P2P, it was still thick client/server. Had they launch a VM inside the operating system and ran a Quake 3 “dedicated server” on the VM OS, and ran the Quake3 client on the PC OS, it would have technically been a “dedicated server” setup.
I challenge you to find one other person who thinks a VM-hosted server running on a home console is a "dedicated server". Just one.