Linden explains on the Second Life Blog Currently, Residents who own land have the ability to specify a select set of media types to be used on their parcel through the Land Management settings.

This allows Residents to do interesting things like watch videos, show Web pages to visitors, or just add ambiance to inworld spaces with streaming music. However, the types of media that could be used inworld has been limited to only those that could be rendered by the set of media rendering engines embedded in the Second Life Viewer, such as Apple QuickTime movies.The LLMedia API will change this by enabling developers to create media rendering plugins for the Second Life Viewer. In the future, by installing these plugins, youll be able to enjoy a wider range of media inworld, without having to download new Viewers to do so. For example, when a plugin is developed for rendering an additional video format, youll be able to view media in that format inworld after downloading and installing that plugin, without having to wait for a new version of the Second Life Viewer that includes this rendering engine.Is this going to create the buzz for Second Life that once existed in the days when it was even getting mentions on NBCs The Office? Im not sure I would go that far, but APIs tend to open up lots of room for improvement, and this one appears to be a step in the right direction for usability of the virtual world. Linden says its going to take some time for Second Life to get to where it needs to be, but considers this an important step in the right direction.