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Windows 7 included what you describe as a feature called "Windows XP Mode," which would launch applications inside a Windows XP virtual machine which was closely tied to the host OS. It worked really well for a lot of applications which weren't ready for Win 7 yet.

https://technet.microsoft.com/en-us/library/ee681616(v=ws.10...

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It wasn't really that closely tied, if I remember. It simply used Terminal Services to run a single application on the server. You've long been able to open local documents with remote applications, and have the general experience very close to a local application.

Windows Virtual PC, the core of the technology, is more akin to VMWare, VirtualBox. The "Windows XP Mode" part of the equation was that Microsoft offered a pre-installed image of Windows XP.

While the virtual environment integrated somewhat with the base (eg audio, printers, some networking shares and hard drives), it still is a separate window running a separate virtualized OS. I'm not sure I would call that too tightly integrated.

Nonetheless I personally found it handy nonetheless to run the occasional very old 16-bit application.

Was sad when I found out they dumped it for Win8 and newer...

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