DSL Tools is the first tools release from Microsoft to start making the Software Factories vision a reality. It leverages the modeling platform developed by the Visual Studio team for the Visual Designers shipped with Visual Studio 2005. DSL Tools enables developers to create design tools to automate tedious and complex parts of your software project.
Using DSL Tools, you can define domain-specific languages (DSL) and graphical modeling tools based upon these languages; the resulting designer is then hosted inside Visual Studio 2005, and users can use the graphical modeling surface to indirectly construct an in-memory representation of the domain-specific language.
The resulting in-memory domain-specific language is typically called a domain model ; this domain model can then be used to generate C# code, XML files — in fact, anything. You don't have to generate code from this domain model, but code tends to be the most common output form.