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You're right, it doesn't answer everything. What it sounds like to me is that you buy the game on disc, install it, and it is tied to your Live account and that particular console. Anyone using that particular console can then play that game. Also, with your Live account you can play the game anywhere...as can 10 'family members' (I have no idea how they will verify that, heh).
I would guess then, you can take the disc, or just download it at your friend's place and play it there as long as you are signed in. And they have said before, your friend can chose to buy it without having to download it again if they want to play it without you.
When you no longer want the game, it can be given away once...or sold to 'participating retailers'. I'm guessing they then have some way to clear the license to resell? ~shrugs~
Strange. And overly complex it seems.
And what about rentals?
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