Secondlife is a virtual reality "Game", pretty much what it's name implies. It's a place where you can create an avatar for yourself and then go about creating a "life" for that avatar.
SecondLife has been around for a few years now and is probably one of the first and most popular sites of its type. Unlike MMORPG's and other game sites where the goal of the game is to compete/fight with other players in some fashion, the "goal" of Secondlife is simply to exist within the virtual world. It's like a multi-person online extension of The Sims.
SecondLife found it's way into the news not long ago when activities within the virtual world began to generate actual real-world wealth for some of the players who had found a way to sell some of the things they had created in the virtual world.
Many people have speculated that online virtual worlds such as SecondLife might be the precursors of a core methodology which all people will eventually use to interact with online information sources. For example, if all of the data you currently store on your computer (Documents, Spreadsheets, bank accounts, pictures, Emails etc) were available to your online avatar, then you might eventually start to use your avatar as the primary access point for all of your computer activity. This would have the effect of unifying the user interface for all functions and "virtualizing" all data storage, making everything accessible to you from wherever you had an access point (culminating in iPod style access through high speed satellite links from anywhere).
But we're not there yet. For now, SecondLife is a "second" life, not a parallel life
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Now that's funny!