You can't play multiplayer games, you can't use facebook on the xbox, and you can't get access to the Deal of the Week (this week was Torchlight for 33% off).
You can still chat with people, add them, voice chat, view others achievements, download demos, videos, arcade and indie games, etc. Basically everything except actually playing multiplayer games. I've had silver for 5 years now and never looked back.
as sson a you sign into xbox live you have silver, with silver you can buy xbla games, but you cant play any games online or stream movies via netflix or hulu, there are also some things that only gold memberships can get
"Well i actually performed the experiment dozens of times. The bad news is reality doesnt exist. The good news is we have a new cat graveyard" -GLaDOS