The base functionality for the AppleTV is very shiny, but incredibly limited. Basically, it'll play iTunes stuff, and anything that's very close to it. It won't, however, play DIVX files, because Apple don't own that. And it certainly won't stream from random file shares - you have to use iTunes to control it.
So, step one (carried out a few months back) was to jailbreak it and install xbmc, which will play just about anything from just about anywhere. Which took about an hour, largely because the first USB stick I used didn't work and I had to borrow one from laserboy.
However, it all works very nicely now.
Except that, for some reason, even the stuff that it supports is incredibly limited. I wanted to watch the Google Wave demonstration video. This is hosted on YouTube. AppleTV supports YouTube. Therefore, I should be able to watch the video on my TV rather than the laptop, yes?
AppleTV supports YouTube videos _that are in the format that AppleTV supports_. So I could happily add the video to my YouTube favourites as much as I like, but it wouldn't show up on the AppleTV. It didn't say "Sorry, this video cannot be played on AppleTV." No, apparently if you aren't Apple Compatible then you just don't exist.
So, 20 minutes of digging later I find a youtube script for xbmc, sftp that over to the right folder on the AppleTV box, run the script and *pow* - _all_ of my youtube videos are sitting there.
So now I'm typing this while the Google Wave video plays on the TV. And very cool it is too.
The moral of the story being - proprietary solutions suck, but lovely hackers will tend to find a way of getting you what you want anyway.