I game in a VM with near baremetal performance.
I use PCI passtgrough do pass the whole GPU into the guest.
I don't use a Desktop Environment in the host though (proxmox)

I made my steam OS partition (Bazzite) the primary, created a new uefi boot partition for it (don't use the windows one, it's more hassle than help), and run a script to reboot into windows now. It works for me when I want to play a Windows only game.

If you've got multiple operating systems on one system, that's dual booting! You can also partition a drive to have multiple os's, but that can have slightly more difficulties.

From last time I tried virtualisation, I needed to assign my graphics card to either the host or the virtual machine, and switching was a hassle. Unless things have changed, I decided booting into windows when absolutely required (anticheat) was the best option - avoiding some of the hassle that comes with virtualisation. If you've got multiple GPUs, that might be an option.

I think OP is talking about having an application e.g. steam launch on startup, which can be set in Task Manager.

Performance for virtual machines is honestly not as bad as you'd expect, provided it has reasonable resources allocated and the host isn't being overworked. A GPU passed through will be much more enjoyable than a software/virtual GPU. You can expect 90%+ (perhaps up to 98% or so) of the performance of bare metal.