Avalon is the new rendering and compositing technolgoy that Microsoft is developing primarily for Longhorn (Microsoft's next release of Windows) that is available in beta form on Windows XP.
From Windows 3.0 all the way through Windows XP, the Windows graphical environment was pretty primitive. The Graphical Device Interface (GDI) provided only limited visual options to developers.
As 3D hardware has improved, the gulf between what developers could do with traditional Windows programs versus what one could see in a PC game grew more and more obvious.
Avalon is designed to bridge that gap. It provides two things of particular interest:
(1) It delivers a new rendering and compositing model that developers can take advantage of. This new model can make use of the latest/greatest advances in video hardware (such as 3D). That doesn't mean one must use it to create "3D" looking programs but rather it means that all kinds of impressive visual effects become possible.
(2) It provides a new programming model that allows software developers to create user interfaces that are defined declaratively (such as created via XAML).
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