If you visit the Windows 7 Personalization Gallery, you will find that Microsoft offers several themes, wallpapers and gadgets for Windows 7. In the gadgets section, you will see Desktop Gadgets and SideShow Gadgets.
Windows Desktop Gadgets are a sort of mini-applications which are based on CSS, Script and HTML. These Gadgets are used to display information like CPU, RAM usage, system properties, RSS feeds or to launch and control applications. You can also use gadgets to display a picture slide show or view continuously updated headlines.
A Windows SideShow Gadget is one written by programming against the Windows SideShow Platform API.
The Microsoft Windows SideShow Platform enables developers to create new and extend existing applications specifically for devices with small displays and limited interaction models. Applications designed to work with the platform are referred to as Sideshow Gadgets.
The devices supported by the platform include, but are not limited to, displays attached to a laptop, front panel computer displays, displays embedded in keyboards, cell phones, digital picture frames, and other display devices.
Windows SideShow is a technology introduced in Windows Vista that enables Windows PCs to drive a variety of auxiliary display devices connected to the main PC. In Windows 7 you will not find Windows SideShow in the Control Panel, unlike in Vista. But the SideShow icon appears when you install a compatible device.
Some Windows SideShow gadgets are made for a specific Windows SideShow-compatible device and might not be compatible with other devices.
You can also have a Windows desktop gadget that can simultaneously run on desktop as well as supply data to devices using Windows SideShow. Such gadgets can update information on these devices when the computer is running and the devices are connected to the computer.