XAML, language for building graphical user interfaces

XAML eases to create, edit and reuse graphical user interfaces for desktop and Web applications.
It is for Windows what XUL is to Firefox and FXML to JavaFX.

XAML means for "Extensible Application Markup Language", and is a XML format dedicated for graphical user interface. Actually the meaning changed over time, the code name of WPF, "Avalon", was once a part of the acronym.
It is a Microsoft product which seem to have got inspiration from Mozilla's XUL and the renderer requires the .NET environment on Seven and WinRT on Windows 8.

XAML on Windows 8

This schema shows XAML on Windows 8.
Both on the legacy desktop GUI throught .NET, and on the Modern UI for immersive apps.

 

Microsoft has created a plugin for browsers designed as an alternative to Flash, Silverlight, which allows you to use XAML on any browser. However, its development was abandoned because HTML 5 with the canvas tag and augmented with SVG provides the essential features of Silverlight, which makes the latter now superfluous. XAML remains an alternative to HTML 5 for immersive applications on Windows 8.

Originally designed to create applications on the WPF platform of Vista, XAML did not really fit in Windows before the version 8.  It actually has the ability to describe a user interface much more easily than HTML, but  it is limited to applications specific to Windows while HTML is a universal standard.
See What future for XAML? for a detailed analysis about the change of mind at Microsoft.

XAML describes objects of the interface with their presentation

It is easier to write apps with XAML than with XUL or any other markup language using CSS, because presentation properties are attributs of the tags. But they will be then harder to modify or to use alternate look and feels.
Here are the other features:

Two examples of XAML code...

Displaying "Hello world!":

<Page xmlns="">
  <TextBlock>
     Hello, World!
  </TextBlock>
</Page>

Drawing a button:

<button 
   Background="Gray" 
   FontSize="18pt" 
   Click="OnClick">
    Submit
</button>

See also this Comparison of XAML and HTML 5, and also with the main graphical user interface languages.