.xap file is the compressed output file for the Silverlight application. The .xap file includes AppManifest.xaml, compiled output assembly of the Silverlight project (.dll) and any other resource files referred by the Silverlight application.
Web pages like .aspx files and .html files use the Silverlight components by loading the .xap files using the <object> tag in the HTML or by using <asp:Silverlight> tag in the ASP.NET pages.
".xap" files (pronounced "zap") use the standard .zip compression algorithm to minimize client download size. A "hello world" .NET Silverlight application (built using VB or C#) is about 5KB in size.
Let us see how a .xap file look like.
Open Visual Studio and create a new project by selecting "Silverlight Application" under the project type "Silverlight". Choose the project name "SilverlightTest". In the next screen, choose the option "automatically generate a test page to host Silverlight at build time".
Visual Studio creates a project with 2 files:
Compile and run the application by pressing Ctrl + F5. You can see the browser opening with an empty page (the page is empty because you have nothing in your default xaml file).
Now open your windows explorer and look in to the bin\debug folder of your project. You can see a file called "SilverlightTest.xap".
Rename this file to SilverlightTest.zip and open it using any decompression tool. You can see that this is just like any other zip file and it includes the projects output dll and another file called "AppManifest.xaml".