This feature of Windows 7 Professional, Enterprise or Ultimate creates a special XP virtual machine that's pre-configured. Should any of these settings fail, Windows 7 has a trick up its sleeve with Windows XP Mode.
It can even be used to reduce the number of screen colours, lower the screen resolution and disable advanced desktop animations and graphics. This lets you fool an application into thinking it's being run on an older version of Windows, down to Windows XP. However, if that's not the case Windows 7, as with older versions of the operating system, has Compatibility settings that can be applied to any installed application. Many applications will simply run on Windows 7 in the same way they did previous versions of Windows. and you'll never see Rosetta, or your PowerPC applications again, if you upgrade from Snow Leopard to Lion. As a OS that has traditionally been used in business, Microsoft knows the value of making sure that old software continues to run on its new operating system. In part, this is because it's evolved each version of Windows from compatible code and has had the safety of using the same hardware instruction set for years. Microsoft has the clear upper-hand in terms of backwards compatibility for applications and has done so for a long time.
