Difference between Processors and CPU core

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http://serverfault.com – can any one please clarify the difference between actual no of processors and CPU cores. in my case i am having Intel Xeon® Processor E5620 as per intels product page: its having # of Cores 4 # of Threads 8 and cat /proc/cpuinfo |grep processor|wc -l is showing 16 so what is this 16 showing here?. I am planning to virtualize this machine with xen to 4 vms,each with 4 cpu.So it will be better if i can understand about these values and assigning vcpus to guest vm. (HowTos)