Xen is Virtualisation software.
The home page is at 
http://www.cl.cam.ac.uk/Research/SRG/netos/xen/
At present full Xen support is not in the LinuxKernel but is getting closer. Firms such as RedHat ship Xen enabled kernels.
See more notes on it at VirtualPrivateServer which in conjunction with this is InNeedOfRefactor
