This figure depicts a physical server with two physical processors, each containing six physical cores Physical Server
A server is a physical hardware system capable of running server software. A hardware partition or blade is considered to be a separate physical hardware system. Physical Processor
A processor is generally a physical chip that resides in a physical socket of the hardware partition and contains one or more cores. Physical Core
Each physical processor contains smaller processing units called physical cores. Some processors have two cores, some four, some six or eight, and so on. The figure above shows an example of two physical processors with six cores each. Hardware Thread
A hardware thread is either a physical core or a hyper-thread in a physical processor. Physical Operating System Environment
A physical operating system environment (OSE) is configured to run directly on a physical hardware system and is all or part of an operating system instance.
For detailed definitions of these and other key licensing terms, please refer to the Microsoft Volume Licensing PUR