Before talking about Windows 7 - 32 bit or 64 bit processors, let's talk itself about 32 bit and 64 bit processors.

32 Bit Processor
In computing, term describing the ability to process 32 bits at a time. The Intel 386 and 486 series of microprocessors are examples of 32-bit processors. 32 bit processor can only handle 4 GB of RAM.

64 Bit Processor 
64 bit processor can handle limitless amount of RAM. The 64-bit processor is backwards compatible with older applications and operating systems; it detects whether an application or operating system is 16-bit, 32-bit, or 64-bit and computes accordingly.

If you are buying new computers these days most of them already have 64 bit processors. 64 bit processors support much greater amounts of RAM than 32 bit processors, and can also process more information at one time than older processors (16 bit/ 32 bit). To take advantage of all of these features, your Windows 7 operating system has to be 64 bit as well.

With previous versions of Windows, you had to decide at the time of purchase if you wanted the 32 bit or 64 bit version of the OS.  Windows 7 has thrown that to the wind, and now both 32 bit and 64 bit versions will be part of the same box. You still have to decide which one to install but you don’t have to answer this question at the time of buying Windows 7.