'Tower of Silence' is the common English term for a sanctified Zoroastrian charnel house in which traditional sky burials are preformed.
In Zoroastrianism death is seen as an evil influence, the (temporary) triumph of the demon Ahriman over the god Ormazd. The dead body is unclean (nasu), and should not be burned, polluting the fire, or buried, polluting the earth. However, the sun and the wind are seen as appropriate agents for cleaning the dead, as are scavenger birds such as vultures, crows, and kites. During this cleansing process, the bodies are kept in a special, open-roofed building called a dakhma (AKA a doongerwadi in parts of India or a deme or dema in parts of Iran). When the British occupying India wanted an English word to describe these buildings, they came up with the poetic term Tower of Silence, although this is not based on any local term for these towers.
Despite the name, Towers of Silence are often not towers. A dakhma is usually built on top of a hill, giving it the appearance of great height, but the building itself isn't particularly tall. Even when the building is 'tower-like', it rarely tops 8-12 meters tall, and may be 20-30 meters in diameter. There are a number of different designs, but they are most often circular, brick or stone buildings, with a large, flat roof open to the sky, with platforms for the dead and a large ossuary pit in the center. The corpses are separated, men from women from young children, and the structure of the dakhma may reflect this, with raised platforms for each group, aligned in concentric rings. The ossuary pit serves as a lime pit as well, adding another layer of cleansing after the birds have picked the bones clean. When the process is complete, no sign of the deceased will remain.
The tower is placed away from any habitations, and in large cities may be surrounded by a park-like area, so that the dead do not pollute the living. In modern times, the deceased may be checked for infections, such as the bird flu, that could be carried by scavengers, and water drainage from the dakhma is carefully controlled. Traditionally, dogs were also allowed to scavenge the bodies, but in modern times dogs are only included symbolically, and may accompany the body and be feed a symbolic piece of bread representing the flesh of the dead. In modern India, poisoning and pollution have decreased the populations of scavenger birds to the point where it can take many days to deflesh (excarnate) the bones, a process that formerly was often complete in less than an hour. There is talk of breeding birds specifically to man the dakhmas, although I don't believe any such project has been undertaken as of yet.
Traditionally, Zoroastrianism does not recognize any method of disposal of the dead other than Dokhmenashini, involving direct exposure to the suns rays and the elements of nature. However, the consecration of a new Tower of Silence is a very rare event, and foreign Zoroastrians are generally required to ship dead relatives back to India for burial (dakhmas were made illegal in Iran in the 1970s). This is an expensive and complicated processes, and some choose not to undergo it. There are some loopholes; technically (and IANAZ), you are not necessarily required to undergo the full Dokhmenashini unless both of your parents were practicing Zoroastrians, you lived in the Zoroastrian faith, and you didn't have the bad judgement to marry an unbeliever. Many Zoroastrians, faced with the difficulty of finding an approved tower, have worked around the issue by burying the dead in concrete-lined graves, thus preventing the pollution of the earth; there are a number of strong religious reasons why this is absolutely horrible, and some other reasons why this is perfectly fine.
Historically (which in this case means within the past few millennia), there have been reports of Dokhmenashini being completed in open fields, in the fashion of Tibetan sky burials, of ad hoc dakhmas being crudely constructed to accommodate the dead following large battles, and of other structures being co-oped as dakhmas simply because they were convenient. Due in large part to government regulations, and perhaps in lesser part to the shrinking of the Zoroastrian faithful, new dakhmas are rarely constructed, and alternative forms of burial continue to gain acceptance.
References:
http://www.suite101.com/content/zoroastrian-burial-practices-of-exposure-of-the-body-a223475
http://www.beliefnet.com/Faiths/Zoroastrianism/Buried-In-The-Sky.aspx
http://www.adenairways.com/Parsee_Temple.htm
http://www.presstv.ir/detail.aspx?id=34664§ionid=3510304
http://tenets.zoroastrianism.com/dokhme33.html
http://en.wikipedia.org/wiki/Tower_of_Silence
http://www.iranica.com/articles/burial-iii
Modern India and the Indians by Monier Williams.
Picture of a Tower of Silence
Icky picture, inside a Tower of Silence