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The fact that your threads are put to sleep is an immediate effect of virtualization. The virtual machine will yield to the host once in a while. It all depends on the CPU shares configured by your virtualization hypervisor.

The processor family visible to your instance is slightly modified and can be configured globally in nova. You can either completely change the model your instances see or just "unify" its capabilities. This is useful if you have multiple compute nodes with slightly different physical CPUs and you want to do online migrations - you need a common denominator across all compute nodes or else the migration will fail.

To get the exact same CPU visible to the instance, on your compute node set in /etc/nova/nova.conf: libvirt_cpu_mode=host-passthrough