Effects in Silverlight come in two primary forms: built-in effects, implemented in the native Silverlight hardware-accelerated runtime code; and pixel shaders, implemented by folks like us using a combination of managed code and High Level Shader Language (HLSL) and run in software. In this article, based on chapter 23 of Silverlight 5 in Action, author Pete Brown discusses both types of effects.
Silverlight Effects (PDF)