WinSxS/Network
Upgrades?
Moving on from compatibility, the various versions of XP will only upgrade particular versions of Windows. XP Home will only provide upgrade paths leading from the Win9x variety, while XP Pro will provide upgrade paths from just about all versions of Win9x up to 2K. This does not include the Server editions. Interestingly enough, it will even upgrade a XP Home install.
WinSxS
What's this you say? A typo of massive proportions? No, it's one of the really cool things under the hood of XP. WinSxS, also called Windows Side by Side, stores multiple versions of the same DLL to bring compatibility to new and old software at the same time. Basically some software takes it upon itself to proclaim that it has the one and only true DLL, thereby screwing everything else over. Some programs require new versions of DLLs; others require older versions. If a program suddenly replaces a DLL, you get all sorts of funky errors. SxS recognizes when some rogue element wants to proclaim its righteousness over a DLL and gently prods it to another location, leaving all the original files intact. The new program then thinks it has installed with impunity; in fact, the new DLLs have merely been crammed into a tiny little niche, all by themselves.
Home networking
With WinME we saw ease of ICS (Internet connection sharing), XP pushes that envelope ever further. With the advent of homes with multiple computers, it has now become quite a necessity. Setup of a home LAN must be made easy for the common folk. Since most of these folks are getting broadband connections now, XP also ships with an easy to setup firewall; quite convenient. This feature works with LANs, PPPoE, VPNs, and dial up connections. In order for good ol' Dad to receive pictures from Grammy, the firewall has port mapping to allow invited incoming traffic.
One really nice feature of XP is the ability to log off and on to your account with everything still running on your particular account. This type of scenario works rather well for a computer that sees a lot of people traffic, a family computer for instance. If little Timmy is typing a paper and big ol' Dad wants to do "important stuff", Timmy has only to log off and relinquish control. Once Dad is done doing his business, Timmy logs on and picks up right where he left off by simply logging in again. All his apps, and windows are in exactly the same place. Ain't life grand?
I suppose RAM restrictions would limit how many people could keep doing this, but if you have the power, this kind of scenario is quite plausible. No one wants to close down all their work, to re-open it 30 minutes later after the runt is finished playing his games. This new scheme of logging on to XP is also helped out by a totally new login screen. No longer do you have to type in your name each time, the new screen actually keeps tabs of all the permanent users and makes an icon for them on the logon page. Of course, if you are part of an internal network, like me, be prepared to see the same old Win2K "Ctrl-Alt-Del" login. But then, you also don't have to worry about runts coming to play on your computer. Just to make sure, keep the tazer attached to the keyboard when you leave.