A .xap file is nothing but a compiled silverlight application.
It contains all the necessary required files for the silverlight runtime to run the application.
It is a kind of zipped file.
It contains an application manifest file (AppManifest.xaml), and all the required DLLs which are required by the application to run.
An important point to note is that the .dll file has the same name as that of the application.
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