Windows install in Bootcamp

It is installed beside os x. In a separate partition.

 

you partition a fixed amount of space on your internal hard drive to run separately from mac os x, and boot into either one at start up. if you want to run win7 side by side with osx you should look into virtualization via parallels or some other similar software.

 

I find VMware Fusion very useful for Boot Camp when I just need to do something quick in Windows, w/ out having to re-boot into Windows. Unity makes it pretty native that you can use your programs for Windows in OS X (as long as the Boot Camp VM is running, obviously).