PHP, one of the cornerstones of LAMP stack, is used by major websites such as Wikipedia. Designed as a server-side language, it normally has to be paired with JavaScript or Flash/ActionScript to build rich Internet applications.
Silverlight, like the rest of the Common Language Runtime, is in theory language-agnostic. In the past it has posed some problems for dynamic languages, which lead to the development of the Dynamic Language Runtime or DLR. The DLR provides a unified object model for dynamic languages and the ability to host just-in-time compilers needed for so-called scripting languages.
Tomas Petricek is leveraging Silverlight and the DLR to allow PHP developers to use their current skill set and libraries on the client. The core of this setup is two files, PhpNetCore.dll and PhpNetClassLibrary.dll. The first is a PHP compiler for .NET, the latter a collection of common PHP functions. When referenced from an XAML file, they allow PHPX files to be loaded and run from within Silverlight.
Because everything is done client-side, there should be no reason why Linux-based web servers that PHP developers prefer cannot be used to host the Silverlight applications.
You can learn more about Silverlight/PHP integration on Tomas Petricek's blog.