Check out this recent article on Crosscut by Jeff Cohen:

Is Seattle ready to take backyard cottages mainstream?

And this new Seattle Times article regarding backyard cottages by Daniel Beekman:

Ruling could pave way for more mother-in-law units, backyard cottages in Seattle

Here is a link that discusses the current city council proposal and the its’ goals:

http://www.seattle.gov/council/meet-the-council/mike-obrien/backyard-cottages-and-basement-units

The city has a nice summary at the bottom I have included for a quick glance: