Silverlight is a web based technology, launched by Microsoft in April 2007. Silverlight is considered as a competitor to Adobes Flash.
Silverlight applications are delivered to browsers in a text-based markup language called XAML. One important difference between Flash and XAML is, Flash is a compiled application where as XAML is text based. Search engines can analyze and index such content, which is a huge benefit for webmasters.
For regular internet users, Silverlight is a browser plug-in that supports video, audio and animations.
For web developers, Silverlight offers much more. Silverlight supports video and audio files without need of much programming. It allows them to handle events from web pages (like handle start/end of video playing etc)