When you use Netflix's "Watch Instantly" feature, you are putting into motion a complex system that uses both hardware and software. Some of this equipment is within your computer and some of it is located further afield. On the hardware side, you are invoking servers that are local to you and to your own video card. On the software side, you are calling upon a powerful software framework that processes the video and audio information.
You can use the Netflix service to play a wide selection of movies, television shows and documentaries on-demand on your computer. You can also stream Netflix to many devices, such as the Nintendo Wii, the Xbox 360 and the PlayStation 3. When you use this feature, the Netflix servers send the movie's contents to your device over your high-speed Internet connection. From there, the information is parsed in your Web browser and displayed for you.
Flash is a framework created and maintained by Adobe Inc. for working with and integrating graphics and sound. You can use it to create both animations and interactive Web applications. Though Flash is capable of processing the streaming data from Netflix's servers, Netflix does not use Flash. When you watch a title instantly on Netflix, the first thing you will notice is a blue logo that loads. This logo belongs to the framework that Netflix uses for parsing its videos. That framework is Microsoft Silverlight.
If you were to analyse the two packages, you would find several similarities between Silverlight and Flash. Both provide an environment within which video and audio can be combined rather smoothly. However, of the two, Silverlight is more optimised for smoothly streaming video. This is incredibly important because Netflix's primary objective with its "Watch Instantly" service is to provide a smooth experience. Netflix has, however, come under some criticism for using Microsoft's Silverlight since it means that Netflix has virtually no support for Linux users, and had delayed support for Mac users.
Netflix, in response to criticisms over the apparent limitations of Silverlight, is considering alternatives. You may see these alternatives implemented in the near future. One possible candidate that you may see on Netflix soon comes from the MPEG committee for Dynamic Adaptive Streaming over HTTP. DASH, as it is called, is a joint effort headed by Microsoft, Apple and several other companies. If you used Netflix powered by DASH or a similar framework, you would likely notice an overall smoother experience because these frameworks will be optimised specifically for streaming video and audio over the Internet.