Microsoft added a number of interesting new features to Silverlight, including multi-touch support, improved text quality, support for a number of new video codecs (including H.264), better 3D effects, and automated search engine optimization. Users can now also take Silverlight applications and run them outside of the browser and even offline. Out-of-browser applications will run in a secure sandbox mode, which makes installing the apps very easy. These apps will also be able to auto-update.

NBC Universal also announced that it will use Silverlight to power its online coverage of the 2010 Vancouver Olympic Games, which will include 720p HD streaming (interestingly, NBC doesn't seem to use Silverlight outside of its coverage of the Olympics).

You can find download links for the Silverlight 3 runtime, SDK, and documentation here.

Expression Blend 3 Preview

Microsoft also showed a preview of Expression Blend 3, its development tool for Silverlight and WPF applications. Among other things, Blend now makes it easier to create prototypes and then immediately take these and turn them into working applications. Blend 3 also now integrates directly with Adobe Photoshop and Illustrator, which makes prototyping in the application even easier.

Azure

Azure, Microsoft's cloud computing initiative, also saw some important updates today. Developers can now host their data on two U.S.-based datacenters, giving them the ability to store their data in multiple locations, while also enhancing performance by reducing network latency. Developers will now also be able to run applications written in non-.NET languages on Azure, thanks to the addition of support for FastCGI. Because of this, developers will now be able to run PHP or Ruby applications on Azure, for example. According to Microsoft, the final version of the Azure platform is still on track for a launch by the end of 2009.