Minecraft server
This won't increase performance per-say but if the VM's use different cores (or even better are physically tied to different cores) then it could enable you to scale the number of clients beyond what one core/thread can handle.
They attempted to setup a waterfall configuration where once one VM filled up it'd start filling the next automatically. It didn't work.
No. These VM servers are virtually independent from one another. Different worlds if you will. It's not a means to make one world bigger. You'd have to hop servers(vms) to see other peoples houses.
They used PROXMOX which is a great free hypervisor. If you still want to pursue this setting it up as they did this is where you'd want to start. What hardware do you have available? Can you dedicate it to serve this function?

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