KVM provides full hardware virtualization, but you can use paravirtualized disk and network drivers (virtio). Most current Linux distributions will use them by default provided you've configured them when setting up the VM.
In full hardware virtualization, every component of the virtual PC appears to be a physical PC and the guest OS uses the same device drivers as it would if it were on a physical PC made of the same hardware. This can be slow because the hypervisor has to emulate common hardware for the benefit of the guest.
In paravirtualization, guests can use specially written drivers for some performance-critical devices (like the disk and network drivers) to improve performance back to near bare-metal numbers. The paravirtualized driver, instead of talking to emulated hardware, talks (almost) directly to the native hardware.
The disk and network drivers are generally the first to be paravirtualized, since they provide the greatest performance benefit. Other devices can be paravirtualized as well, though doing so doesn't provide quite as much actual real-world benefit.