The library is released under the GPL with the following exception:

Linking this library statically or dynamically with other modules is making a combined work based on this library. Thus, the terms and conditions of the GNU General Public License cover the whole combination.

As a special exception, the copyright holders of this library give you permission to link this library with independent modules to produce an executable, regardless of the license terms of these independent modules, and to copy and distribute the resulting executable under terms of your choice, provided that you also meet, for each linked independent module, the terms and conditions of the license of that module. An independent module is a module which is not derived from or based on this library. If you modify this library, you may extend this exception to your version of the library, but you are not obligated to do so. If you do not wish to do so, delete this exception statement from your version.

Note The exception is changed to reflect the latest GNU Classpath exception. Older versions of #ziplib did have another exception, but the new one is clearer and it doesn't break compatibility with the old one.

Bottom line In plain English this means you can use this library in commercial closed-source applications.

Can I use SharpZipLib in my commercial application?

Yes you can, there is an exception in the licensing terms that allows linking #Zip with any application. The source code to #Zip is however still GPLed and so any changes to the source code you may make should be made available to everyone.