In short Second Life (or SL) could be described as a three dimensional virtual world, an interactive multimedia platform and online community *. It is not a game per se, but it includes game-like elements, which can be utilized on gaming. Second Life has also online commercing elements and it's own currency, Linden Dollars (L$) which can be bought with and traded as real life currency. Basic usage of SL is free.
To be able to use Second Life one needs to create an avatar (or two). Avatar will have a starting appearance, which is chosen on the registration form. The appearance can be changed to almost anything after getting into the world. The avatar can be male, female, robot, animal or pretty much what the imagination brings to life. User can also decide the amount of anonymity and transparency they want to play with. In general the community consists of very open minded people and for instance male users having a female avatars are not that unusual phenomenon. Avatar can be seen as a manifestation not just of who you are, but also as who you want to be and what your interests are.
The community actually consists of many subcommunities, which mostly can blend. For instance the areas built for and run by very thriving steampunk communities are often open for non-steampunk avatars. However it's always best to check the community rules, if available. Obviously some users aren't as open minded as others and since there's always a human user behind an avatar (exept for bots) lots of drama occurs in time to time. A bot is supposed to be registered as scripted agent on Second Life account page.
Second Life can be utilized for promotion and marketing, but also for community building and even educational use. The problem of SL is that it doesn't offer a ready made formula for how each individual or organization should use it. This is also the good thing. Basically the sky's the limit and your avatar can even fly.
Premium account costs a little less than 90 USD a month (annual billing). To be able to buy a sim (also called as island or land) one has to have a Premium account. However land can be rented or sort of leased from fellow SL users and to do so basic account is sufficient. At the moment the customer service in SL is not much to talk about. Having a Premium account also apparently gives access to better service.
The exchange rate of Linden Dollars varies like with any other currency. Some users even play with the market and gain income with it. At the moment the rate is about 255 L$ per 1 USD. Linden Dollars can be used for paying rents to the fellow SL users and buying virtual goods such as clothes for an avatar. There are also lots of free items, freebies. Some of them are given as promotional gifts by designers. Some designers create solely or mostly free items.
The quality of the freebies varies a lot and lots of them are stolen goods, copied from legit designers. Not all the free items are stolen, but I suggest to be careful when getting freebies. Also some of the items for sale are copybotted. Copybotting and copying is unfortunately wide spread problem in SL and other virtual worlds. Using a CopyBot and copying is against the Second Life Terms of Service and can result in being banned.
Linden Dollars are also used when uploading textures, sculpt maps (created with 3D programs such as Blender), animations, sounds and so forth. Each upload costs 10 L$ at the moment. Besides of having currency to pay the store space rents, uploading textures etc. and for marketing expenses, running a store and selling goods in Second Life requires different sorts of skills, as design, 3D and scripting skills.
Avatar's move from a place to another by foot, with vehicles, by flying and teleporting. Teleporting is the main mean to move from a sim to another. Second Life offers lots of different activities. Bands, DJs and other musicians can throw live performances and artists can upload their artwork for the other users to enjoy. There are many beautiful sims to explore and spend time alone or with company.
Many SL users create strong bonds with each other and even have romantic relationships. In some occasions these couples never meet in real life (RL), but many RL relationships have bloomed in SL. Often Second Life is presented as a place where people have virtual sex. This is however not what all the users do inworld and doesn't tell the full story of what can be done in and with Second Life.
All the "photos" on this post were taken at various places in Second Life by me. The images feature designs, poses (animations) and builds by myself and other Second Life users. The avatar featured on the images is my main avatar Bastet Hazelnut.
*) Second Life is run by Linden Lab.