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DirectPlay is a network communication library that is part Microsoft's DirectX APIs (although has been largely replaced by Games For Windows - Live platform). DirectPlay provides an interface between applications (games) and communications services. DirectPlay, then, can provide a link between players over the Internet, regardless of what actual hardware is used to establish the link (modems etc.), and it resolved many previous connectivity issues that network gaming came up against before it. In 2004, Microsoft revealed that DirectPlay would be deprecated in favor of the Games for Windows - Live technology that was already in use with the Xbox console at the time. DirectPlay is deprecated with the Windows Vista release.
Other DirectX related glossary:
DirectX Media Objects