Silverlight is Microsoft's entrance into the rich web presentation platform. People are describing it as MS's attempt at a Flash replacement.
Tim Sneath, an MS evangelist, gives a pretty good overview on Silverlight in this article, describing it's main features.
What I think it particularly interesting, is that Silverlight is platform agnostic. You don't need a Windows server to deploy it, and you don't need a Windows client to view Silverlight content. Definately a smart move for MS and a preferred direction compared to Vista's closed platform mentality.