There's a lot of information in MSDN about Silverlight security, but it's hard to know where to start sometimes. "This document tries to give you a lay of the land so you can orient yourself and figure out what details are relevant to you. The other thing it does is it gives an introduction to our security thinking, for example why it's safe for Silverlight to allow sandboxed apps to open files (OpenFileDialog & isolated storage). We don't get into every detail of every security decision we've made, but it'll give you a lot of insight into how we choose what to enable in the sandbox," said Nick.
Silverlight Security Overview