IE4 introduced the UI control that allowed you to build full-blown applications in your browser using server-side processing. IE5 introduced the scripting that allowed you to build full-blown applications in your browser using client-side processing. They introduced browser plug-ins before anyone thought they would ever need them and could do AJAX years before that term that was invented. Since then, the other browsers have improved upon the things IE introduced, but haven't taken any considerable single steps forward.
For reasons beyond my understanding I still can't embed MathML and SVG in my HTML and there has been very little development towards more sophisticated browser-applications, despite a huge demand (Microsoft gave it a try with XAML, but by then it had lost its culture of innovative engineering).
Instead, browser developers spent 10 years coming up with the Canvas element. The state of browsers is so bad that if a serious developer wants to do anything slightly off-track today he has to resort to a proprietary plug-in called Flash.
Lets hope Chrome stirs things up a bit.