Xen linodes have a watchdog device available using the xen_wdt driver, but nothing like it seems to be available on the new KVM offering.
It is a useful device to support. When enabled and a user space daemon on the virtual machine pings the device, the hypervisor will do some configured action, usually reset the VM, if it fails to ping in a timely fashion. Say if the kernel is locked up, or just hosed user space. Its a useful fallback to have when all else fails.
KVM supports a couple of virtual watchdog models, I usually use i6300esb for my deployments as the driver for it tends to be available in distribution kernels.
This feature, while seldom actually configured, is also present in most real hardware, embedded, laptops, desktops, servers, on arm, x86, mips, etc.
On Intel systems, there is one in the PCH ("iTCO_wdt" driver - named by marketing obviously), and often a separate one in the "Super-IO"/monitoring chip.
In case anyone are curious

Note, this is not to be confused with Lassie.