Windows SideShow is a new technology in Windows Vista centered around sending textual (and some image) data to external devices. These devices can take the form of the i-mate Momento Digital Photo Frame (http://www.momentolive.com) that can display single lines of data to a Windows Mobile device that can interact with the data. See http://www.sideshowdevices.com for more upcoming devices.
A gadget developer simply targets the Windows SideShow framework and any devices that support this framework can execute the gadget.
A few gadgets are available at the moment. The best is probably the Windows Media Player gadget. With this gadget Momento is able to display the user the current playing track on your PC but a full Windows SideShow device would allow the user to interact with the music (changing the track, adding tracks to the Now Playing list etc...).
The Windows SideShow debugger emulates a full Windows SideShow device and allows developers to peek into the mechanics of executing a gadget on a device to help them understand how best to optimise their gadgets.
Other examples of gadgets include an Email reader, RSS reader, Weather reports, traffic cameras, upcoming calendar appointments.
The folks over at Engadget have got a screenshot showing SideShow content on the Momento Photo Frame: http://www.engadget.com/photos/hands-on-with-the-i-mate-momento-70/168188/
-james
Ikanos Consulting