The AMD Athlon™ 64 Processor Operational Modes (also applies to Intel chips with EM64T)
Compatibility Mode: Compatibility mode is designed for a 64-bit processor that still needs the capability to run 32-bit applications. The AMD Athlon 64 processor is capable of this natively, which eliminates the need for 32-bit emulation on the hardware level.
Long Mode: True 64-bit Long Mode is intended for a native 64-bit OS environment where the application is also running 64-bit. Windows XP Professional x64 Edition is capable of using both modes, and the AMD Athlon 64 processor is capable of switching between 64-bit Long Mode and Compatibility mode from within the 64-bit OS.
Why Move to 64-bit?
If 32-bit systems offer excellent performance now, why move to a 64-bit OS at all? It’s a question with a multi-faceted answer, depending on your needs.
Increased Memory Addressing: Standard 32-bit computers have a 4 GB limit on addressable memory. 64-bit computing offers a memory address limitation measured in exabytes that will open this potential bottleneck for years to come.
Increased Computational Power: The AMD Athlon™ 64 processor adds an additional eight General Purpose Registers and eight 128-bit streaming SIMD extension (SSE) registers. Using a 64-bit OS opens these for application-usage for the first time. Increasing the raw computation capability of the processor in turn opens the door to increased visual detail in games, unprecedented scientific modeling, and stronger performance across a wide range of applications.
No Performance Penalty for Running in 32-bit: Unlike computer platforms that emulate 32-bit or x86 compatibility, AMD64 architecture can execute such commands natively. The advantage to this is that even legacy 32-bit code is delivered with no performance penalty. When running in a 64-bit OS, Microsoft’s WoW (Windows on Windows) 64 mode allows the chip to natively access programs; in a 32-bit OS such as Windows XP (standard), no such operating mode is needed. This is in direct contrast to other 64-bit designs, which require emulation (and take a massive performance penalty for executing 32-bit x86 operations).
Moving to 64-bit will not universally improve performance in all applications and test suites, but it won’t degrade performance either. This logically translates into a scenario where the “worst case” possibility is performance equality, and the best-case is a significant performance boost. For end-user, corporation, or major business server, this is a universal win.
This information was taken from a document on http://www.amd.com