According to its description on Microsoft's website,
Microsoft Agent is a set of software services that can enhance a user interface with interactive personalities in the form of animated characters. These characters can move freely within the computer display, speak aloud (and by displaying text onscreen), and even listen for spoken voice commands.

(Click image for larger view)
As an example, Crago uses "Agent Peedy" (shown above) in a simple application that measures the length of a line drawn on the Tablet PC screen. The 10-page paper highlights areas where agent-based applications differ from more conventional Tablet PC apps.
Read the MSDN paper here:
Ink and Agents on Tablet PCA simple web-based demo of Microsoft Agent is available
here.
Related stories: