OK.
You download and install the server software from the logitech website. It runs in the background on your PC, or indeed can be run on linux boxes and NAS boxes (in which case you don't need a PC turned on). You point it towards your music folder and it scans it. You can tell it to use your iTunes library (without changing any of it of course), or it can scan the folder and make its own database.
So after you do that, you turn on your receiver (the little back box in the photo) and controller (the yoke like a remote). The idea here is that the receiver sits at the back of the rack and the cables go from it to your DAC or amp (it has analogue, optical and SPDIF coax outputs). The remote sits in its own dedicated charger stand.
When you turn it on, there is a simple set up procedure where it scans for a wireless network. You choose the correct one, and give it whatever wep key you are using. Then it asks for the name of the PC/NAS where the server software is running. Again, you select this from a drop down list. After that its ready to go. You can play any of the music of any format from your library via any of the outputs to your amp/preamp/DAC. You can also play internet radio stations, including paid services like lastFM etc. You can make or use preexisting playlists, shuffle, random, album at a time, song at a time, genre, artist, etc etc etc. It can categorise internet radio stations by genre, location, decade, special interest, favourites from around the world etc etc.
In addition to all that, there is a headphone jack on the controller (the remote) and you can plug in some headphones and listen through the controller in the same way, eg if you didn't want to turn on the amp, or if you were walking from room to room etc etc.
The software is very unobtrusive and uses very little memory etc. and generally it all just works right out of the can. Sound quality is pretty good, about the same as a reasonable CD player through the analog outputs, through a DAC generally better. The controller sits in its stand when not in use and can be set to display a clock or album art etc. When a song it playing, it also will display the album art. Note that the screen on the controller is not touch, but thats all done through a jog wheel and centre button, kinda like an iPod.
There's a short vid here on it:
http://www.youtube.com/watch?v=64HwO6bx ... re=related
BTW, once you have the server software installed, you can add more squeezebox products, and play different stuff in different rooms, all running from the same server and using the same library.
Fran