A. All 64-bit versions of Windows have, by default, a Windows on Windows (WoW32) subsystem that allows the execution of 32-bit code on the 64-bit OS. I say by default because in Windows Server 2008 R2 Server Core, you can uninstall the WoW32 subsystem.
This subsystem allows you to install and execute most 32-bit applications on a 64-bit version of Windows. For example, Microsoft Office is a 32-bit application and runs with no problems on 64-bit editions of Windows Vista and Windows 7. There are some exceptions, however, and certain applications won't run on 64-bit editions of Windows.
All device drivers must be digitally signed by the developer for use on 64-bit Windows, and all device drivers must be 64-bit—32-bit device drivers won't work. If you have hardware that only has 32-bit drivers and a driver isn't provided as part of Windows, then it won't work.
You can't run 16-bit applications on a 64-bit OS. If you need to run 16-bit applications on a 64-bit OS, you have to install a virtualization platform such as Virtual PC, create a 32-bit Windows VM, and run the application there. If you're running Windows 7, you can use the XP Mode virtual environment to run 16-bit applications.
Another good practice is to install both the 32 and 64-bit versions of most common runtimes, such as SUN Java, VC Redistributables, and video codecs.
Related Reading:
Check out hundreds more useful Q&As like this in John Savill's FAQ for Windows. Also, watch instructional videos made by John at ITTV.net.