Native VHD boot is currently supported only on certain versions of Windows and is disabled on other versions of Windows. This article/tutorial shows how all versions of Windows 7 can be installed and booted from a fixed size VHD using a free driver called Firadisk.
In Windows 7, Native VHD boot is currently supported only on Ultimate and Enterprise versions and is disabled by a license policy on other versions of Windows. This article/tutorial shows how Native VHD boot can be enabled on unsupported versions of Windows 7 as well.
Windows To Go is a new feature in Windows 8 Enterprise that allows Windows 8 Enterprise to boot and run from USB hard disk and flash drives. However this feature is not limited to Windows 8 Enterprise and can be unofficially enabled in all versions of Windows 7 and 8 by using a tool called WinNTSetup
With Windows 7, you now have the option to boot the OS from a VHD, a virtual disk file, instead of a partition. This way, you don’t have to reconfigure your hard drive partitions.
This feature is similar to Ubuntu’s Wubi installer which uses a similar concept to avoid reconfiguring hard drive partitions.
Basically, instead of installing windows 7 to your physical HDD by getting rid of Vista or even dual booting off another partition, you can install to a virtual HDD (in VHD format), and boot off the VHD so you actually get the hardware functionality to play with!!