njeneb,
From what I have seen you can either run an application in XP mode - in which it will have a full XP look to it's window, but be just that - a window on the desktop (but still running in a virtual XP environment). Or you can run a full instance of XP as you would with any other virtualization solution with a desktop in a window.
From the sounds of it, it's a lot more than just getting MS Works running ...
However, I haven't tested it myself, but all of the reports I've read on it have been positive and none have mentioned any sort of limitation on what you can do with it.
The only limitation is that the CPU has to support hardware level virtualization and you need a couple of gigs of extra memory.
Do you have a reference on your information - I'm just curious, as I would like to have all of the data.
Regards,
Micheal
P.S. Here's one article on it ...
http://news.cnet.com/8301-13860_3-10229125-56.html