We have a ton of information on this on the website (including a FAQ).
In general, the license allows you to:
* distribute the runtime installer on a closed intranet
* distribute the runtime installer on fixed media, such as CD or DVD Roms.
* distribute and launch the runtime installer as part of another native installer
In general, the license does not allow you to:
* modify the installer, or files to allow AIR application to run without having the runtime installed on the user’s system.
* distribute DLL’s or other files from the runtime directly within an application
Note: Installing the Adobe AIR Runtime silently, deploying via SMS or Group Policy Objects is currently not a supported option. If you require installing the runtime silently please send an email to email@example.com so that we can notify you when that feature becomes available.