Here's one way that involves multiple steps, but it offers good insurance against potential problems. You'll need another computer to use temporarily until the process is done. For reference, I'll call your existing domain controller "DC1".
Setup a new Windows Server machine on new hardware, and join it to the domain as a second domain controller. I'll call this "DC2".
Make sure your domain information is fully replicated to DC2. Then, power off DC1 but don't do anything else to it just yet. Make sure your domain can function normally using DC2 only as the domain controller.
Once you are sure of that, remove DC1 from the domain.
Install a fresh copy of Windows Server on the old DC1 machine and join it to the domain. I recommend using Server Core but that's up to you. Install the Hyper-V role. If your own computer (the one you use for your regular work) is Windows 8.1 or above, you can install all of the management tools you need, and manage the servers from there. You'll need RSAT (Remote Server Administration Tools), and Hyper-V manager.
Once Hyper-V is up and running, install a new copy of Windows Server as a VM. This will be your new domain controller. You can use the same hostname and IP address as the original DC1. Set it up as a domain controller and let it replicate.
Power off DC2 and make sure you can function OK with your new DC1. Once you're sure, then you can decommission DC2.
Now you can install more VM's if you want. With 16 GB of RAM on the host, you should be able to run 2 or 3 additional VM's.
Note that I haven't addressed any licensing concerns. You should check with your vendor to make sure you'll still be in compliance. You'll likely need to purchase additional server licenses.
Oh, one additional comment: you can use ESXi for your host instead of Hyper-V if you want to. That's really up to you, but be aware that ESXi is really picky about which network adapters it supports. Unless your machine has a Broadcom or an Intel NIC, it probably won't work.