Second Life is an online virtual game/social networking environment--think multi-player Sims. As a Second Life player, you can buy real estate and open a business, among all sorts of other things to do. Some people have made a little money selling virtual "things" (an oxymoron of sorts) to other players. You can create your own stuff, but some people prefer to avoid the effort and sometimes substantial technical knowledge needed to do that and just buy stuff from other players. Second Life is often compared to the virtual world described a decade ago in Neal Stephenson's book Snow Crash, which I had slightly baffled architecture students reading in 1997 in my Information Architecture class.
Second Life is interesting to Internet insiders not so much for what it is now but for what it may predict in terms of online behavior and interaction in the future. Recently, the virtual environment has received a lot of favorable press, but The Register has deconstructed a lot of the claims. Those people claiming to make lots of money selling virtual stuff are selling largely to newbies also hoping to cash in and sell stuff, which looks a lot like a multi level marketing (MLM) scheme, which usually relies on an endless supply of new customers. Except there usually is not an endless supply. Those that got in early actually do make some money. But if you are late to the game--literally, in this case--you may make little or nothing.
It is a cautionary tale of "irrational exuberance," and a reminder that just because something is new and different does not make it a sure thing. Even in cyberspace, if it looks too good to be true, it probably is.