Second Life is to a large extent a textual construct. What people do is largely expressed in text, the rules and regulations (how it's supposed to look and be used) for a certain area is expressed in text as well as the online identity that is constructed in every avatar profile. In fact, people are hardly ever as specific offline about their preferences or interests as they are online. As a result, I can actually learn more about how people think online than offline.
My interest, as a games researcher with a background in literature, is probably more in what goes on in their minds, what they are interested in and what they aim for, than in what they actually do. This probably has to do with me not seeing SL as a game, and neither as a world (even if I sometimes call it that), but rather an entirely new type of medium (although very much a product of our offline world), which in a way is halfway between the dreams and fantasies of our individual brains and a more constrained physical world. In some ways online worlds are clearly in line with the old MUDs and MOOs (especially considering the fact that they rely on text the way they do), but the 3D feature drags it closer to the physical world. Most people aim to create the ultimate dream environment in SL, and it is usually based on their "real world" ideals—if they dream of a hacienda by the ocean in real life it is far easier (and more affordable) to build one in SL that (if they are reasonably good at building) will look exactly the way they want it to look. It will definitely be done faster than in real life and although they will be clear about it being a digital version of their fantasy (and thus not enough as a substitute for lazy days on the beach) it will still be something far more tangible than a fantasy inside their own brains.
Individuals thus use Second Life as a platform to build their dreams, and for those who dream about fantastic cars, beautiful houses, lush gardens etc the "digital materialization" is not unreachable. But what if they dream about something entirely different, something that involves other people? Another aspect of this new medium, which it shares with the MUDs and MOOs, comes to the forefront: this is a shared space. Individuals might come together since they share the same dream of having a family, want to belong to a group that shares the same interest, or wish to explore aspects of themselves or others they haven't dared to or been unable to explore previously.
The fact is that groups in Second Life are seldom homogeneous in terms of physical location, personal or social backgrounds. The frequent mobility between groups and communities makes common stories and group mythologies (that are born—not just altered—inworld) unlikely. In some cases, as seen above, these common stories/mythologies are not necessary—a simple "be nice to each other" is often enough—but when more details, definition and steering are needed, this is usually done by importing mythologies. They provide an important means for groups and communities to define themselves—they set the stage, they prescribe how people are supposed to behave and they provide the reasons why. If somebody has dreamed of becoming a Jedi knight in Star Wars, an elf or an orch in the Lord of the Rings, or a slave girl out of the Books of Gor, and furthermore, dreamt of sharing that fantasy with other people who have been inspired by the same stories, this has now become possible in the shared "thought space" of Second Life.
The boundaries of this type of open role-play, in which they take part, are thus decided upon before they even begin and the task is to act out their own ideas and fantasies while staying in character within those boundaries. The Star Wars Jedi wannabes tweak their characters to be what they personally find most interesting, Lord of the Rings fans create the most interesting elf or orch they can imagine, and the Gorean slave wannabe explores what it is like to relinquish control, responsibility and identity to a "master."
Does this sharing of fantasies make people do things in the physical world that they wouldn't have dared to do? Does it make offline controversial behaviour seem less controversial (just because it has already been acted out in an online public arena)? Does this visual sharing of ideas and fantasies challenge our boundaries and perhaps change how we think? Does it change who we are as individuals? Yes, to some extent I actually think it does. It is important to highlight that Second Life is not a space that is separated from the physical world. What people do in SL can actually have repercussions in the physical world, as several lawsuits or stories such as the one about the guy who with the "help" of SL became less shy in the company of other people even in the physical world effectively show. In any case, something that has to be taken in account today is that thoughts and ideas are made visible and public long before they are manifested in the physical world. It's not necessarily the action or the result that matters only, it's actually something that comes before that—the idea.