Note: this blog has been migrated to Medium, with the articles here available to preserve permalinks. Please see this post at https://medium.com/@ianrbuck/steam-in-home-streaming-first-impressions-415860859b23
The best way to explain Steam's in-home streaming is to quote Valve directly:
Any two computers in a home can be used to stream a gameplay session and this can enable playing games on systems that would not traditionally be able to run those games. For example, a Windows only game could be streamed from a Windows PC to a Steam Machine running Linux in the living room. A graphically intensive game could be streamed from a beefy gaming rig in the office to your low powered laptop that you are using in bed. You could even start a game on one computer and move to a more comfortable location and continue playing it there.In-Home Streaming is in beta right now, so I decided to test it out using my roommate's computer. We're both running Windows, but his computer is significantly less powerful: he has an i5-3330S with 8GB RAM, and I have an i5-3570K, a GTX 670, and 16GB RAM.
The first step was to make sure both computers are using the beta version of Steam (they already were.) Then I logged into both computers using the same Steam account. Both computers popped up with a message saying that they were ready for in-home streaming. I decided to test it out with games that a) were too graphically intense for Declan's computer, and b) were only installed on my computer.
First up, I tried Batman: Arkham City. It looked really good and I didn't detect any lag. However, I quickly remembered that I had gliding and grapple hooking set to my mouse's thumb buttons. Since Declan's mouse doesn't have those I couldn't move around very quickly or gracefully.
Next I tried out Borderlands 2, and I took a quick video of it. Naturally, that means that I was playing one-handed, so again it wasn't graceful. It's worth noting that although both computers display the game on their screens, only the computer that is receiving the stream outputs the audio.
Next I decided to try to break the system. I had read that when a computer is being used to stream a game to another computer, it can't be used for anything else. On a hunch, I Alt-Tabbed out of the game on my computer. Both computers were then displaying my computer's desktop environment. It was essentially just a remote desktop connection, though the only way to get out of the game is from my computer.
So there you have it, Steam in-home streaming works as advertised! Of course, it's only useful to those of us with multiple computers in their house, and I have no idea how well it will work on different routers. I think it would be a very good move for some company to come out with a Steam Machine as small and cheap as possible, with the intention of taking advantage of in-home streaming. It would be like the Chromecast of gaming, and we know how well the Chromecast sold.