Yep, works like a charm with VMs.
The usual considerations for using VMs apply, no new or extra considerations. The main ones are: making sure that the physical host can handle it and that the VM instances have enough resources.
After posting my question I read more about FMS and VMs and the issue with single/multiple cores. Getting the VM optimised to FMS seems to be the trick -- as opposed to just setting up the VM to have lots of resources.
We have been running FMS on VMs now for about 3 years. Now hosting about 20 solutions to nearly 60 concurrent users that are both in-house and work-from-home users.
We had some issues at first due to IT only allocating a single under-powered VM. Once I was able to prove the benefits of FileMaker, by saving the company about $800K per year and growing in reduced vender licensing fees and time savings) they gave me what I needed. Our main deployment is on two VM's with quad core processors and 8GB of memory each. I now have a separate FMS VM for a single machine FMS setup for testing purposes with a dual core processor and 8GB of memory.
All is working well.