Microsoft announced their Windows 7 SKUs. At first I muttered under my breath figuring they learned nothing with the overlapping Vista versions. But further details showed that while there are several editions there are only two main versions. And the versions build on one another (the Russian Doll metaphor is used) rather than mix and match features.
Paul Thurrott’s Win Supersite has the best explanation of the versions, but Windows 7 Home Premium and Windows 7 Professional are the main versions while the others are for specific niches (like enterprise/volume licenses or emerging markets).