The Silverlight for Windows Phone Toolkit is a set of controls and classes that you can use in addition to the standard controls that come in the Windows Phone 7 developer kit. These additional controls provide you with features for autocomplete, time and date picking, gesture recognition, and more. Not only does the toolkit provide additional rich controls for your applications, it is also an open source project, which means you can download the controls in binary form as well as the entire source code for the controls. This means if you need to make any customizations or modifications to the controls, you can do so. You can also examine the code to get a better understanding of how some of the Windows Phone 7 controls are created.
To get your hands on the toolkit, you need to go to www.silverlight.codeplex.com. There you'll see download choices for the web version of the toolkit as well as the phone version. You should download the phone version and run the installer after the download has completed. When the installation program has finished, you can add the binary DLL files to your project and use all the controls included in the toolkit.