Virtualization is a hot topic these days. With hardware getting more and more capable, by means of cheap multi-core processors and gobs of memory, we can expect virtualization to become only more important in the coming years. Virtualization promises reduced costs for IT organizations, both hard (machines, power, cooling) and soft (admin and operations personnel).
There are lots of products on the market already, but two that draw the most attention are open source Xen & VMware family of products. VMware is the pioneer of the virtualization on the industry-standard hardware (having been founded in 1998) and is currently offering many inovative products, some of which are free to download and use. Xen, on the other side, is under heavy development, but is already promising unprecedented levels of performance.
With so many products on the market, sometime it's hard to distinguish among them. For the two above mentioned, Reza Rooholamini, the Director of the Global Solutions Engineering in Dell, has written very nice explanation of subtle architectural differences between them. He explains:
VMware ESX Server's architecture is based on direct execution (run user-level virtual machine code natively on the hardware) and binary translation (dynamically translate any privileged code). Since essentially a full x86 platform is exported to a virtual machine, ESX Server enables almost any OS that can execute on x86 to run inside a Virtual Machine (VM) without modification.
Xen's architecture uses a paravirtualization technique that modifies the guest OS so that it knows it's running in a virtualized environment. With hardware-assisted CPU virtualization technologies like Intel VT and AMD-V, Xen 3.x also supports unmodified or fully virtualized guest OSs. VMware has also made announcements regarding paravirtualization support in its products.
You can find full article here.
Also for more information about virtualization, this special report from InfoWorld [PDF] provides lots of useful information.
If you want to know more, especially about Xen, there are lots of additional whitepapers about virtualization on this site.