This is one description of SecondLife
A persistent, streamed 3D reality that simulates a world with over a hundred geographic regions, each of which is contained on separate Internet servers, merged together to form a contiguous continent. The natural world of Second Life, however, is a basic palette. Using the building and scripting tools available to them, the paying subscribers (or residents) create almost all the objects contained in it: homes, public buildings, vehicles, weapons, clothing, etc. This facet distinguishes it from a MMORPG (Massively Multiplayer Online Role-Playing Game) like Star Wars Galaxies or Everquest, which are genre-oriented and emphasize gaining experience and wealth for your alter ego, or a non-genre MMOG (Massively Multiplayer Online Game), like The Sims Online, which emphasizes social interaction and chat
SecondLifeâ„¢ is an online virtual reality system with an interesting property: users explore a common space and can make modifications to it. This is extremely significant to what I have in mind. As an example, as well as users being able to see each other's 'avatars' and interact with each other, if a user places an object on the ground then other users will be able to see that object. This may not appear to be too significant: after all, interaction at this level occurs in many online games. What makes it much more significant is the extent to which the environment can be modified by users.
Users can use construction tools to build three-dimensional objects with which other users can interact. They can obtain the rights to hold virtual land and can create elaborate buildings and other structures on this land or in 'common' areas known as 'sandboxes'. They can use a high level language to create scripted objects that can even be let loose into the environment to behave autonomously.
This whole idea has extreme scope. SecondLifeâ„¢ is effectively a three-dimensional version of the existing internet. The existing internet has often been said to provide a 'cyberspace' - a kind of virtual environment in which, as well as interacting with each other, users can make their own pages which can be visited by other people. SecondLifeâ„¢ takes this idea and applies it to a three-dimensional world which is changed in real-time by the actions of the humans interacting with it.
One important concept of SecondLifeâ„¢ is that it does not have a specific use. It is a place, not a specific tool, just as the existing web forms a type of place. The 'inhabitants' of SecondLifeâ„¢, from the comfort of their homes, have done many things, just a few of which are:
Making houses in which to chat with friends
making communal spaces such as nightclubs
making shopping malls for the sale of virtual objects
fighting simulated battles in 'damage enabled' areas using scripted weapons that they make themselves
even meeting to conduct real-world business deals
Check this slide show
http://images.businessweek.com/ss/06/04/avatar/source/3.htm