layered service providers are a technology provided by microsoft to enable developers to insert their programs into the TCP/IP stack in windows... in layman's terms, this means that a developer who implements an LSP is making a program that will sit between the network(internet) and any network clients (such as browsers or email clients) running on the machine...
some malware has been known to be implemented as an LSP in order to intercept outgoing traffic and redirect it or send copies of it to malicious 3rd parties...
spyware isn't the only application for LSPs, however... it's also possible for an anti-malware vendor to implement an LSP that performs known-malware scanning (or sometimes more specifically known-exploit scanning) in order to catch and block attempts to exploit vulnerabilities in browsers and other network clients before they can ever reach those clients...
[see this link for more information on layered service providers]
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