I should also point out that in VS Beta 1/SQL Beta 2, this Xcopy functionality is limited to those with admin rights.  In the next beta, non-admins will have Xcopy capabilities as well.   So, joe user that gets my app and database, that is a normal (read: non-admin) on his machine, will be able to run his app directly as well. 

Some have asked questions about security threats, etc.  By default, SSE has networking turned off.  The default authentication mode is NT Auth. 

Think of SSE as your starting point for database application development.  It's very easy to use and, it *is* SQL Server.  When your app grows up beyond single machine needs, and you want to turn networking on, or move it to a full fledged SQL Server installation -- it's a simple painless conversion.  Depending on what you want to do you either just turn networking on for SSE or you move your MDF to a server and attach it (and change the connection string in your app's config file.)