I found an intresting thread when reading the dragonfly-users list.

One of the questions the thread starter asking is

1) What is the difference beetwen Xen and VMware?

and Matthew Dillon gives him a good answear:

   VMWare is a machine emulator.  Operating systems running under VMWare
   think they are running on the actual hardware (generally speaking).

   Xen is an operating environment.  Operating systems running under Xen
   have to be aware that they are running under Xen.