Previewed at WWDC, launching in the fall.
Apple iTV Impressions and Details
Iger describes the device's functionality:
It's wireless. It detects the presence of computers in your home; in a very simple way you designate the computer you want to feed it and it wirelessly feeds whatever you downloaded on iTunes which include videos, TV, music videos, movies or your entire iTunes music library to your television set.
And also explains that it is very easy to control and the appeal to content developers is to provide them roll in selling content to the DVR/TVR audience.
...if they've forgotten to set their TiVo device or their TVR or they just have no plan to do it but they want to watch an episode that they missed, they can go to iTunes, buy it for $1.99, [send it] to the set-top box source wirelessly and watch it on the television."
Iger also indicates that the device does indeed contain a hard drive... a fact that was not entirely clear from the preview.
MacCentral has posted a question/answer article for iTV which gives an overview of the device, in case you missed the original preview.
Long term Apple fans will remember that Apple almost launched an Apple Set Top Box years ago but it was never officially released. Interestingly, the Set Top Box device was described as "Apple's ITV system" in a press-release, indicating that Apple has recycled this codename (iTV). The final name for the upcoming system has not yet been decided.