It’s true, Windows 7’s secret new feature is XP Mode. It’s a virtual Windows XP machine—complete with a fully licensed copy of Windows XP SP 3 installed on the virtual machine—that you can download which runs seamlessly in Windows 7, so you can do crazy things like run IE6 side-by-side with IE8. It’s meant for businesses who need compatibility for mission critical XP-only apps.
Really, don’t get too hung up on it—it’s only for the Enterprise, Professional and Ultimate versions of Windows 7, not the Home Premium version you’ll probably be running one day. (The release candidate is Ultimate, so you can toy around with it after downloading it here.) You also need a processor with either Intel Virtualization Technology or AMD-V and 2GB of RAM. And you can’t really do anything intense like gaming inside of it.