Dot Net Assembly Question:

It is a primary unit of deployment in a Microsoft .NET Framework application. It is called as building block of an application which provides all required execution information to common language runtime.

An assembly perform following functions:
It contains IL code that gets executed by common language runtime.
It forms a security boundary.
An assembly is the unit at which permissions are requested and granted.
It ensures type safety by establishing name scope for types at the runtime.
It contains version information.
It allows side-by-side execution of multiple versions of same assembly.

Assemblies can be static or dynamic.
Static assemblies are created when the program is compiled using .Net compiler. It exists as PE file either in .exe or .dll. However, dynamic assemblies are created at runtime and run from the memory without getting saved on the disk.