There are two modes that the ARM7 core can run in – ARM and Thumb.  ARM is the native 32-bit mode for the ARM7 core.  The Thumb mode, on the other hand, is a mode in which each instruction is 16-bits – this can decrease code size, but will result in slower overall execution since all instructions will be decompressed to a native ARM instruction during decode.  The above slide compares the program counter (PC) indexes as these two modes proceed through the 3-stage instruction pipeline.