Microsoft Silverlight is a transformative technology. Many website owners who’re initially thrilled at the cutting edge presentation shown on their websites are later confounded when their beautiful sites suddenly fail to show up in the search engine results pages (SERPs). In those cases, webmaster failed to account for search engine optimization (SEO) when they implemented Silverlight. Silverlight apps are packaged with .xap extension. Unfortunately, search engines can't easily read Silverlight XAP files. But as of today, you'd be wise to cater to what the search engines already do very well: read text. This means you need to add text-based information -metadata and more - to Silverlight objects. The key to success in ensuring that down-level users willn’t be abandoned when you use an advanced technology like Silverlight is to implement a graceful degradation strategy. “Instead of using the <embed> tag, use the <object> tag to instantiate your Silverlight content in your page. The <object> tag allows the page to provide secondary, down-level content to be presented in case the initial, primary content (such as a Silverlight application) cannot be presented.”

More info: Illuminating the path to SEO for Silverlight