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npm is like pip in Python, its a way to download and install packages. node_modules is a directory where these packages are installed. This is not the same as a virtual environment; which has the interpreter along with additional libraries.
In node, you can get a virtual environment (see: is there an virtual environment for node.js? for more details). The idea is the same – an isolated environment for better testing and portability.
In Python, there is requirements.txt (and pipenv), in node you have package.json (for packages), and modules (which go in node_modules).
The documentation goes into a bit more detail into the difference of these; but coming from Python you can think of a node package as something that has a package.json (so, like a setup.py), and a module is just any file you can import (or include() in node).
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Hey when you install a package with npm the packages are installed to node_modules within the working directory (on a project to project basis).
With the exception of when installing packages globally (npm install -g packagename)
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To add to the excellent answer above, and to confirm if this suspicion of mine is true:
The major difference between node_modules not creating a true virtual environment is that whenever you run a node application, it will "reach_out" to use the node/js interpreter that is installed "globally" .. this of course can be manipulated with nVm, but python’s virtual environments don’t run on a "globally" installed python interpreter, instead with the one scoped-narrowly to the virtual environment