So can they actually play games over it? I hate youtube videos like that, i always imagine an absolute tosser behind the camera thinking he's the dogs balls.
You can play games over it if the game supports it, which some do. All that's really going on here is that you are controlling the PS3 remotely and it is streaming its screen back as video at PSP resolution. Play TV supports it for example, so you could use it to watch TV on holiday, etc.