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Essentially all normal user-mode processes work the same as in a native kernel. The exceptions are processes which execute privileged instructions. hwclock is the normal culprit in a normal installation. Distribution installation procedures are the other main class of such processes. They tend to try to probe the hardware, which on UML isn't going to work.
Networking works, both between virtual machines and between a virtual machine and the host and outside net.
All filesystems and network protocols work as they do on a native kernel.
X works both as a client on the host X server and as a server with Xnest as the local X server.
Kernel modules also work as they do on a native kernel.