Previously, to legally run Mac OS X as a Virtual Machine, you were limited to just Mac OS X 10.6 Server. Although there were methods that allowed running Mac OS X 10.5/10.6 client as a VM, they clearly broke Apple’s licensing agreements and were not supported.
Apple has changed their VM licensing policy with Lion. Now if you running Lion, you are permitted to run up to two VMs of it… “to install, and run up to two (2) additional copies or instances of the Apple Software within virtual operating system environments on each Mac Computer you own or control that is already running the Apple Software”. You still can’t legally run Lion as a VM on non-Apple hardware, but this change is a big step in that direction.