When people click to try to install an x86-compiled .exe file in the ARM version of Windows 8, this is what Windows needs to do:
1. Check if the app is already re-compiled and automatically download and install the ARM version from the Windows App Store. This process can be about as quick as installing the application on x86.
2. If the app is not yet re-compiled, it offers the option to run it in Virtualization mode on ARM, served through Windows cloud computing services, well cached and parts can be emulated for near-instant interactivity and instant response within the app, this is clever cloud served virtualization that also runs a bunch of things locally to offer the least possible delay. It's part virtualization and part hardware accelerated emulation, they can do it. Apps not yet recompiled for ARM can automatically send a notification to the developer encouraging him though a simple one-click feature to recompile and submit the ARM version of every app in the Windows App Store. Users in the enterprise can combine more locally and more dedicated virtualization servers if they need to further lessen lag time or if they don't trust the cloud for certain confidential apps virtualized.
Michael Angiulo, Corporate Vice President, Windows Planning, Hardware & PC Ecosystem said following:
We will make sure it is absolutely clear where your legacy apps will run. (...) Porting things and whether we open native desktop development are decisions that are either not made or not announced yet.