XBAP stands for XAML Browser Application. XBAP allows for WPF applications to be used inside a browser. The .NET framework is required to be installed on the client system. Hosted applications run in a partial trust sandbox environment. They are not given full access to the computer's resources and not all of WPF functionality is available.
WPF supports the creation of applications that run directly in a web browser. (So will WPF/E, when it is released.) They are called XAML Browser Applications (XBAPs), and have a .xbap file extension.
The power of this WPF support is that the exact same programming model is used for a XAML Browser Application as for a standard Windows application. Therefore, creating an XBAP isn’t much different than creating a standard Windows application. The main differences are as follows:
. Not all features in WPF or the .NET Framework are accessible (by default).
. Navigation is integrated into the browser (for Internet Explorer 7 or later).
. Deployment is handled differently.