We made some pretty major architectural changes with VS 2010 to enable much better and more accurate multi-targeting support.

VS 2010 now ships what we call “reference assemblies” for each version of .NET.  A “reference assembly” contains only the metadata of a particular framework assembly – and not its actual implementation (making it much smaller in size on disk).  This metadata is enough, though, to ensure that VS 2010 can always provide 100% accurate intellisense when targeting a particular version of the .NET framework. It also means that properties exposed through the property grid within designers, API listings within the Object Browser, and all the other various places within the IDE accurately reflect the exact API version signature.

We also updated the VS 2010 debugger, profiler and compilers to be able to target multiple versions of the CLR.