What is Second Life?
Second Life is a multi-user persistent 3D virtual environment in which users control representations of themselves known as avatars, and have the abilty to construct 3D objects in real time using a built in object editing system . These objects can be scripted to perform actions and display varying properties using a scripting language called LSL, which is similar to Java or C in it's appearance, but with all the good stuff taken out and lots of 3D related functions added in.
Animations can be created with external programs and imported into Second Life. Poser was the primary program used to make animations, but there has recently been made available an open source program that is much easier to use that Poser.
Clothing and textures for objects can be made in paint programs such
a Photoshop or Photo-paint or Paintshop Pro or GIMP and imported into
Second Life.
Second Life has a "micro-currency" based economic
system in which the monetary unit is called a Linden. Lindens can be
traded for real currency.
Some folks can earn non-trivial
amounts of money making products for sale in Second Life. The company
that makes Second Life quotes some real high figures but I don't
believe them.