I don't have an AppleTV yet, so I can't give any first hand experience. What I will do is give an overview of the AppleTV and then point you to a large set of resources where you can learn more.
The Apple TV:
- Costs $299US. That does not include cables to connect it to your TV which could run you up to another $50US.
- Requires a Widescreen HDTV. This is an important point. It will not work with a "regular" TV. As a friend of mine pointed out, widescreen TVs are flying off the shelves at Best Buy, so I guess there are more of them out there than I realize. I don't have one, and that is the main reason that I don't have an AppleTV.
- Plays all of your movies, TV shows, music videos and video podcasts that you have in iTunes.
- Shows your photos from iPhoto as slideshows.
- Plays your music as well. The AppleTV has a nice screen saver that displays your album covers while it is playing music.
- Does NOT play DVDs. DVDs can be converted to a format that you can import into iTunes, however. You can learn about that by reading the articles in the resource listed below.
- Has a hard drive and can store its own content. This means you can send your video content to the AppleTV and your Mac doesn't have to be on to watch TV.
Macworld magazine has put together a huge resource center for the AppleTV that tells you in great detail about all there is to know. You can access that resource here.