InformationWeek has an interesting article this week by Charles Babcock highlighting the virtual I/O capabilities of the Hyper-V system.
It seems that Microsoft wasn't happy with the standard emulation software that serves as a series of alternate network adapter cards. Since it can't run in the same partition as the hypervisor, too much overhead was needed to shuttle instructions back and forth between the VM and the emulator.
Instead, the company devised a "synthetic device" that utilizes native Windows drivers to exchange data between partitions, forging a more direct line to the I/O channel.
The idea actually came from XenSource, which originally helped Microsoft devise the system for Linux environments.
Hyper-V is expected to be embedded directly into Windows Server 2008 by mid-year.