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Linden Dollars (abbr L$ as a prefix or L as a postfix) are the medium of exchange in Second Life. They can be purchased from the Lindex or other sources, and they are exchanged by residents. They can pay for some services directly such as uploading images or listing in search.
The Linden exchanges to the dollar at around 262L to one US Dollar, which is the official exchange currency of the Lindex.
Linden balances are show in the upper right hand corner of the client screen in Green. Residents with negative linden balances can not even buy objects listed for sale at 0L.