A server, according to Microsoft, must always be licensed for peak capacity (the maximum number of concurrently running virtual instances). For example Windows Server 2012, with Standard Edition, your entitlement is one physical instance and up to two virtual instances. In this kind of configuration, that physical instance can only be used to manage those virtual instances. What does this mean? If your server must periodically support three or four virtual machines, another Windows server 2012 Standard Edition license is going to be necessary on that same server. This is referred to as license stacking and it works quite cost effectively – until the number of licenses of Standard Edition exceeds the cost of the required Datacenter Edition licenses. The threshold for this is about 10 virtual instances. The 11th virtual instance on a single server would require a sixth Standard Edition license. At that point, instead of buying that sixth license, you might want to go with Datacenter Edition. Miro very often comments about how Software Assurance has evolved to become so much more than simply the ability to upgrade to the next version of the software and here is perfect example of that.