
Version 3 brings many enhancements. You have 3D graphics as well as shading. There is support for themed apps. You have support for SEO.
The goal is to bring desktop style apps to the web. You need to know your XAML to work with this tech. If you want to put video on the web and do it well, you need Silverlight 3. And it will get taken to an even higher level with Silverlight 4.