If you're from the old school, the word silos probably will rub you the wrong way, with memories of data locked up in disparate departments and systems.
But on the web today, it means something different. We should always be looking at building silos as long as we're building "open top" silos (the bottom can be closed, or open, doesn't matter... we'll get to that later).
An open-top silo is a web service that is focused on doing one thing, deep, and really well -- but no thrills, not extraneous features, nothing. It's job is to do one thing really well, and to go deep in doing it. The open-top aspect basically implies that there is a way to peer into the silo and take advantage of an open web service API.
By building silos, you gain power. Doing one thing really damn well in an "open silo" environment often creates innovations and emergent behaviors that you otherwise wouldn't generate if you tried to be all things to all people -- or even many things to many people.
At BubbleShare, we built a silo. The top isn't open yet, but it will be.
Our silo was building a simple photo sharing solution for people who just want to share digital photos. We just launched a new version. Not because the last one was broken, but because we wanted it to be better -- and we had the luxury of making the silo even deeper this time around by refining the few things that we didn't do perfectly (and there's a lot of that still!).
Bottomline: Instead of trying to build out, we built up. Building up/deep gives you power. Open tops give you emergent behaviors. For example, we would have never thought of the iFrame hack that led us to create a more elegant and "official solution" -- one that lets you embed an album in your blog -- if it weren't for our simple design and an enterprising Chinese developer who created the hack to slot our output into his website.