Indeed, Apple's $99 AppleTV is a limited box that runs on iOS — it lacks features other than video streaming. As always, the crafty hacking community is stepping up to the plate once again to unofficially make Apple products more useful with a variety of functions — the latest integrating a web browser and Last.fm support.
FireCore is releasing the "tweak" additions in a package called aTV Flash (black). The web browser is called Couch Surf (how appropriate) and looks kind of idiot-proof with its large cursor arrow. It kind of reminds me of the Opera web browser available on Wii. Music streaming via Last.fm will also be bundled as part of aTV Flash (black).
The hack will obviously only work on jailbroken AppleTVs so there is always a risk when you start tampering with software. A tear-down of the AppleTV revealed 8GB of internal storage that Apple doesn't advertise as accessible for consumers. If Apple won't officially give us apps on AppleTV, we're fine turning to the dark side for a little help in that department.