Along with the release of iOS 4.2.1 for the rest of the iOS device lineup, Apple has updated the new AppleTV 2 device in order to support AirPlay video streaming.
While many sites reported that the new build for the AppleTV 2 was iOS 4.1, it is in fact iOS 4.2 (but NOT 4.2.1 which was a bugfix build for portables due to 4.2 being pulled after it went Gold Master earlier this month).
AirPlay video is of course the major new feature in this build. Users can now stream video from an iPhone, iPod Touch, or iPad running iOS 4.2.1, directly to the AppleTV 2 wirelessly. In addition, iTunes on the Mac or PC can also stream video to the AppleTV 2. Read more