This is what Microsoft meant about Multitasking

Microsoft said that Windows Phone 7 would not need multitasking due to their system of tombstoning applications, which would let you resume applications quickly after you left them.

Unfortunately, this system usually doesn’t work well. However, there are a few applications that are stellar examples of how this works, showing it truly works perfectly. For example, Hearts, gMsg, Flashcards, and Notes all resume brilliantly. And when you combine this tombstoning with the back button, you can respond to texts or even open another app, and then jump straight back to where you used to be, with nothing lost (Watch the YouTube video)!

This video proves that if developers program their apps well, we don’t even need multitasking on Windows Phone 7. Of course there are some instances where you would need multitasking, like streaming Pandora, but for many applications, this works perfectly. And heck, doesn’t Windows Phone 7 look uber elegant and smooth in the video?!?