Virtual Machines

A VM is software that emulates a physical computer. You need a host machine to run a VM, whether it's your local machine i.e. workstation or server. A server can host many VM's without performance issues.

Majority of all software including TestComplete will run on a VM. It's not necessarily to know the host, hosting the VM is either a workstation or server.

We had TestComplete licences hosted on a physical machine, that's is connected to the main domain. I have a VM that is on a virtual private network, which doesn't have access to the main domain. Our IT  team have configured the VM to gain access to the licence server. I run TestComplete on the VM.

Not that I'm aware of. 

Your best bet is to get in contact with SmartBear.