From what I understand it is supposed to be streaming with the DVR capabilities which is perfect once a larger hard drive is released, as I assume this will be compatible with current 360 owners and will not require the purchase of new version of the 360. As far as I can tell this will simply allow the 360 to function as an IPTV set top device that will stream and record television shows.
Hopefully network based television shows from Fox, NBC, CBS, etc. will be available as well. If would have to be if the goal is for this to be an all encompassing TV experience. From the demo video it seems to work very quickly and has some nice guide features built in for sure. Plus they did note that the video download service will remain independent of the IPTV functionality. So there will be a couple of different ways to bring television and video content to the 360. Streaming 720p IPTV content would be something I would consider if the channel offerings are there.