Another take -- for those who prefer walled gardens
The Apple TV is a bigger, stationery-networked iPod that you hook up to your TV, and its degree of desirability is directly proportional to how much iTunes is the center of your digital media universe. If you've got all your music in iTunes and you frequently purchase TV shows and movies from Apple's service, Apple TV is enticing indeed. It can automatically sync with one iTunes library but, instead of requiring the use of an iPod, it's done automatically via your home network. You can also stream music, video, and podcasts directly from up to five networked computers (Windows PCs and Macs). Streaming from guest computers--say, a friend's laptop that has the latest episode of 24 or Lost--is as easy as a couple of keystrokes.
Source: Apple TV: First impressions | Crave : The gadget blog
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