According to XDA Developpers, Google is working on a light version of the Android Generic System Image (GSI) which is itself already a simplified version of open source Android. This extra light Android would be called MicroDroid.
One of the purposes of MicroDroid would be to allow running a minimum version of Android on a hypervisor in order to virtualize an individual Android application rather than providing a full secondary desktop environment.
Also according to XDA Developpers, this MicroDroid project is probably part of Google’s larger effort to enable virtualization on Android hardware, with the aim of improving security. Google working on bringing the Linux kernel virtualization mechanism called “KVM” to Android devices running on ARM64 SoCs, according to this article by Jack Edge on lwm.net