The live service is a subscription, I think silver is free; has limmited access to multiplayer online games on certain days/weekends. Gold membership allows multiplayer online games any day; costs about 50 bucks for one year membership/subscription.
here's a link to a rundown of the gold "fee based" and silver "free" versions of the live subscription.
http://marketplace.xbox.com/en-US/goldBenefits.htm