Linux containers provide isolation between applications using namespaces and cgroups. While containers appear similar to VMs, they do not fully isolate applications and some security risks remain. To improve container security, Docker recommends: 1) not running containers as root, 2) dropping capabilities like CAP_SYS_ADMIN, 3) enabling user namespaces, and 4) using security modules like SELinux. However, containers cannot fully isolate applications that need full hardware or kernel access, so virtual machines may be needed in some cases.