XAML is suppose to be Microsofts new system for creating User Interfaces.  XAML stands for eXtensible Application Markup Language.  It is to be a replacement for XML/XSL and HTML.  We have yet to see how XAML will actually pan out, but wtih Microsoft pushing it, there's no telling where it will end up.

XAML will end up being a large part of the new Windows Presentation Foundation (WPF) that will be a part of Windows Vista.