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On Windows 10 v1803 (i.e. April 2018 update) when importing a PFX, an option like
[ ] Protect private key using virtualization-based security (non-exportable)
appears on the import wizard. What is the underlying technology and it's mechanics from security perspective?
Virtualized-Based Security (VBS) uses TPM module to store keys. The key is accessible from within OS, but won't be available if OS is changed. More details on VBS: https://docs.microsoft.com/en-us/windows-hardware/design/device-experiences/oem-vbs
