Windows CE has nothing to do with Win 7. Wiki actually has a pretty good explanation for what it is. http://en.wikipedia.org/wiki/Windows_CEhttp://en.wikipedia.org/wiki/Category:Windows_CE_devices
Here is some more info about the SDK for CE http://msdn.microsoft.com/en-us/library/aa459143.aspx
It's not made for consumers to install, but used for small devices such as phones, set-top boxes, etc... It evolved into Windows Mobile on the cell phone arena, but it still used in some other devices.