So I was working on one of my unit testing projects which displayed the results in a plain old .html page. When integrating it with SharePoint 2010, I realized that I could not navigate to .html pages. When I entered the URL of a html page, the browser asked me whether I wanted to download the html file instead of displaying it in the browser.
After some digging around I came across this very informative post:
So basically there are two modes for file handling in SharePoint 2010. "Strict" and "Permissive". Strict mode entails that only the trusted filetypes in the web application are opened in the browser. For all the rest of the filetypes the response will include a "X-Download-Options: noopen" header. This header will basically instruct the browser not to open the file inline.
When the mode is Permissive, no such restriction will be placed on the files. If a file lives inside SharePoint, then it will be displayed inline by the browser.
You can create a hybrid approach by keeping the Browser file handling mode as "Strict" and using the
SPWebApplication.AllowedInlineDownloadedMimeTypes property of the web application to specify which file types are trusted in your web application.
By default the Browser File Handling property of the Web Application is set to "Strict". To change it to permissive, follow these steps:
Go to Central Administration > Manage Web Applications > [Highlight a web application] > click General Settings in the Ribbon > Scroll down in the General Settings window to see Browser File Handling. Set as desired. Save settings.
Note: The recommended option from Microsoft regarding Browser File Handling is "Strict"
(Quick and Dirty hack: You can keep the extension of a file as .aspx and include pure html inside it and SharePoint will run it even if the Browser File Handling is set to "Strict")