Full Review - Interface and Syncing
Apple TV User Interface
As soon as the gorgeous animation subsides, the Apple TV user interface appears. The user interface looks almost exactly like Front Row (common to most recent Apple computers), though there are clearly more menus and options for controlling media and configuring the Apple TV.
The Apple TV user interface is beyond simple; a 90 year old grandma could figure it out in a matter of seconds. Listed are options for viewing movies, TV shows, photos, movies trailers, podcasts, etc. You can also play music from your iTunes library on your TV. If you have a high-end audio system hooked up to your TV, this can be quite a nice experience.
There are numerous ways to customize the Apple TV experience, including modifications to the screen saver, video dimensions, HDMI brightness, determining whether content should sync or stream from any of the 6 available computer connections, etc.
The Apple TV screen saver is flat-out gorgeous. It takes stock images already on the Apple TV or images from your iPhoto library, and creates a multi-image animated tapestry that scrolls and spins on the TV screen. It's one of those things you have to see for yourself; absolute drool-worthy eye candy. 
Apple TV Screen Saver
A limiting factor to the Apple TV user interface is the inability to browse and purchase iTunes videos and music directly from the Apple TV. You can view automatically-synced movie trailers via the Apple TV, but at the time of this writing, Apple has deprived the Apple TV of being a point-of-sale device for the iTunes store.
Moving Content to the Apple TV
Once the Apple TV has been setup on your wireless network and paired with your iTunes library, it automatically begins to synchronize all the audio and video content in your iTunes library. It is important to note that ALL your content is selected by default. If you don't have any intention of moving your music library to the Apple TV, you should quickly deselect the 'sync music' option in the Apple TV section of the iTunes program interface. The same goes for your iPhoto library (for Mac users).
Syncing content from iTunes via wireless connection can be a bit time consuming. I used a 5GHz 802.11n network to move roughly 10GB of content. The data moved along at rates ranging from 1.9MB/s to 4.1MB/s. For a 10GB library, those speeds mean a sync time of 45 to 80 minutes. For a 30GB library, the time required for syncing would skyrocket to 2-4 hours.
Luckily, the Apple TV can be synced by standard LAN cable for faster syncing.
You can connect the Apple TV to your AirPort Extreme router (or any other router with available LAN ports) and connect your computer to the same router via LAN cable, or you can try my preferred mode, which involves connecting the Apple TV directly to my MacBook Pro via LAN cable, completely bypassing the router. Transferring my iTunes library by wired connection sped things up from roughly 2-4MB/s to 11MB/s. A 10GB library that takes no less than 45 minutes by WiFi took only 15 minutes through a LAN connection. A 30GB library syncs in about 45 minutes.
If you have your iTunes library on an external hard drive connected to an AirPort Extreme base station, you may find that syncing the Apple TV will take a long, long, long time. If this is the case, try connecting your external hard drive directly to your computer by USB 2.0 and then sync to the Apple TV. Speeds should increase dramatically.
Of course, syncing your Apple TV by wired connection may not be feasible all the time, but it sure makes for an efficient first-sync. After the first wired sync, updated wireless syncs are a piece of cake.
Turning off Syncing
Some people may opt to let the Apple TV stream all content from any of up to 6 local computers (no matter if they're PC or Mac). After an iTunes library has been synced with the Apple TV, turning off syncing forces the Apple TV to erase all synced content from the hard drive. The user interface warns of this, so it's hard to accidentally erase content. I do not understand why the Apple TV cannot temporarily disable syncing rather than forcing an all-or-nothing option on the user.
As for audio and video quality in strictly-streaming mode (i.e. no content on the Apple TV at all), I noticed no downgrade in quality whatsoever. Whether I was watching movie trailers that Apple sneaks onto the Apple TV or whether I was watching any of my high-res 16:9 videos, the content looked great. In fact, with my 802.11n network, I was able to watch a movie for a while, then repeatedly skip to and from any point in the film (using the Apple remote) without the video stream ever skipping, lagging or stalling. I abused this feature as much as I could to see if I could force the Apple TV into giving me stuttered content, but I failed to break it.
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by Stacey on May 5, 2008:
“We loved Apple TV so much, we now have two... one for each floor of the house. The larger size is a must, especially with the movie download capability, from the couch. That said, here's what I would suggest to make users like us even happier: - allow...” More...