XBAPs are page-based applications that run inside the browser. XBAPs are full-blown WPF applications, with a few key differences:
They run inside the browser window. They can take the entire display area for the web page, or you can place them somewhere inside an ordinary HTML document using the <iframe> tag (as you'll see shortly).
The technical reality is that any type of WPF application, including an XBAP, runs as a separate process managed by the CLR. An XBAP appears to run "inside" the browser simply because it displays all its content in the browser window. This is different from the model used by ActiveX controls (and Silverlight applications), which are loaded inside the browser process.
They have limited ...