The filing system that let you find your documents, search for words inside docs you can't find, encrypt everything, shove it around on the hard drive and keep track of the apps, documents and entire filing systems full of other documents and data up in the cloud? That was a late addition.
Windows has never been that good at it, especially dealing with apps that stream in from elsewhere, live on the hardware a while and then go away and trying to remember where those other documents were and why they're not accessible right now even though they seemed to be on a drive that lived within Windows dominion.
Cut the connection to the hardware and there's a segment of the operating system that keeps talking to the hardware so it won't get lonely and freak out (hardware is neurotic).
The important parts will float on top of the hypervisor so they don't have to worry about hardware at all. The hypervisor will deal with it, leaving the main part of the OS to focus on keeping all those meshed connections straight, replicating things at the right time and in the right places so you always have them available and keeping everything wrapped up in a nice little envelope that makes all the apps and utilities and data and pictures and music and everything else you use as portable as the junk you cram in your shoulder bag and lug home at the end of the day.
That's an "operating environment."
With Microsoft taking care of most of the basic snippage between the hardware and software virtualization specialists like VMware, Citrix, Virtual Computer, MokaFive and others can focus on improving performance, encryption, management, portability and integration with different devices, clouds, networks, hardware and devices.
(They won't do it; VMware, Microsoft and Citrix will keep fighting over whose approach to exactly the same place is better until customers either start ignoring them or it becomes obvious no one wants to hear the competitive slagging any more. Figure sometime around Windows 9 SP1.)
With portability and the ability to divide responsibility for hardware and software within the OS, the operating environment (OE) can move from one piece of hardware to another more easily.
At first that means you can store your OE on the network, leave your laptop at home and call up your whole work "desktop" from a rental or public PC in a hotel, airport or other place you no longer have to lug a brick of a processing unit.