Steve Jobs has made very clear in his keynote addresses that he (and consequently Apple) will not endorse technologies such as Flash 10.1, instead opting for "technologies with a bright future" - in this case HTML5. As a result, the iPhone and iPad's Safari browser do not come bundled with Flash support.
However, he does not seem to realize that Flash accounts for a significant percentage of interactive web content and HTML5 is still in it's infancy. As such, iPhone users are stranded without a large portion of what would make their web experience complete.
The inevitable has therefore happened, and Flash has been ported to the iPhone/iPad by hacker and developer comex, who is also responsible for the JailbreakMe and Spirit jailbreaking tools.
It’s called Frash, and an image of it running on an iPad can be seen above. A video has also been put op on YouTube demonstrating a forthcoming iPhone port and this is what developer comex has to say:
Frash is a port of the Adobe Flash runtime for Android to the iPhone, using a compatibility layer, by comex…Frash can currently run most Flash programs natively in the MobileSafari browser. Frash uses a multi-process model similar to Chrome on the desktop, so a crash in the Frash/Flash plugin doesn’t take down the browser. Video and keyboard input are currently not supported. The former will require major reverse engineering of the video decoding frameworks on the iPhone, but the latter should be reasonably easy to implement.
Frash is open for other developers to help develop. Visit the Frash GitHub page to learn more if you are interested.
Source: Engadget