Licensing in a virtual environment can be confusing. Here is a nice summary of how Windows Server is licensed and explains the differences between Standard, Enterprise, and Datacenter editions.
One thing I really appreciate about this article is that even though it was written by a Microsoft employee, it specifically acknowledges that the licensing model is true for all virtualization platforms. There are some folks out there that misrepresent this.
Reminds me of this clever video from DanteDog:
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