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It's this thing:
It plugs into your TV, and lets you use your computer, tablet, or phone as a remote control for services like Netflix and Youtube. You can also "cast" any page from the Chrome browser to the TV. For $35 it's pretty neat, although it's basically still in "beta" and has rather limited support. 3rd party apps for it are not yet allowed on the Play store, but when they are I suspect this thing will get even more useful.
The one glaring downside is that there is no (official) way to stream content from your local hard drive to the device. There is a workaround: any file that you can open in the Chrome browser can be "cast" to the TV using that particular feature. Alas my videos are .MTS files, which aren't playable in Chrome. There is not technical barrier to streaming all sorts of local content, so I suspect that feature will come along eventually.
My TV already has a Youtube app on it, but it's painful to use. The Chromecast is brilliant. From the Youtube site, I simply click the cast icon on a video and it appears reasonably quickly on the TV, and the picture quality is excellent.
I'll revisit this thread with updates if any new and cool uses, apps, etc. appear for the Chromecast.