Silverlight is a plugin from Microsoft that is a lot like Macromedia Flash. If a developer has developed something for their site written with Silverlight instead of Flash, you won't be able to view it without the plugin. There are many features that Silverlight has that Flash does not, however, Flash is still the more popular of the two plugins. For more information on Silverlight, browse the links in the 'Related Links' section.
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The reason for installing Microsoft Silverlight is to allow Microsoft users a better experience while running more options and programs to enhance their Microsoft experience.