Because of how different they are MS needed to allow a method to go from XP to 7. You can't spin the disk and move from XP to 7. So they allowed the "double install" method. Legally you need to have a legit copy of XP to do this. If the current machine has no OS, you aren't legally allowed to use the upgrade disk.
And of course if the disk is already being used on another machine you can't use it. One install per working machine, unless you have the family pack.