SAP stands for Session Announcement Protocol.
It is defined in RFC 2974.
It uses multicast to announce streams efficiently on a Local Area Network or on the MBONE: any computer on the network can receive announces from all others without any manual configuration.
SAP conveys SDP's to describe streams parameters. This can include an RTSP control URL to use for setting up the stream, or a multicast group address to subscribe to. The SDP also includes port numbers and audio/video codecs parameters, and a stream name, etc.
This technique allows a lot of server to emit streams (often multicasted) and announce them on the network.
Clients on the network can then listen for these announces.
VLC can do this with the "SAP" service discovery plugin.
You then get a listing of all these streams and can simply tune into the stream of your choice.
Because SAP uses multicast (as do UPnP and Apple Bonjour), it can normally only operate on a Local area network.
Unless your computer is connected to the MBONE, you cannot use SAP to advertise your streams onto the Internet, nor can you receive streams from other places.