The read-only firmware increments the counter when a new version of
the read-write firmware has been verified.
The read-write firmware increments the counter when a new version of
the kernel has been verified and has booted successfully.
The code that does the verification (i.e. checks that the crypto hash
of the next stage of software has been signed with Google's private
key) also checks that the version number in the next stage is greater
or equal to the "stored" version number (i.e. the one it expects).
Not sure what you mean by "virtualized".
There are very detailed docs about this at
www.chromium.org.
Cheers! :)
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