Apparently some programs that are running on windows xp will not be compatible with windows 7.In order to avoid these compatible problems Microsoft has decided to include Windows XP inside Windows 7. The feature is called Virtual XP Mode, or XPM, because it will include a virtual machine with XP SP3
XPM will be made available, for free, to users of Windows 7 Professional, Enterprise, and Ultimate editions .It requires one additional download from Microsoft website(XPM will not be included Windows 7 DVD) but is completely free in those Windows 7 editions
It is noteworthy that just as Microsoft Enterprise Desktop Virtualization (MED-V), XPM does not require running the virtual environment as a Windows desktop,Windows XP will run inside Windows 7. When you install an app in Windows XP, it will be recognized by Windows 7, and a shortcut icon will be placed in the start menu, like any other install. Absolutely anything you were running on Windows XP before, will continue to work in Windows 7 by using XPM.
Of course we can achieve almost the same result with another virtualization software like VirtualBox or VMWare, but it’s great that this feature has been included, so Windows 7 will ensure 100% compatibility with programs running on Windows XP .The people who were using the stability and compatibility of Windows XP as an excuse to upgrade other OS (Vista) has no longer have that excuse.This Feature(XPM) is also included Windows 7 Build 7100 RC which will be released to public on May 5(which is already leaked to torrent sites).