The All-In-Wonder is basically a video card with a TV-Tuner built-in. So you can use your computer to watch TV, or use it like you would a VCR--to record shows at different times/channels so that you can watch them later. The advantage of a computer is that it's easier to set-up more complex programming than on a VCR, plus you are only limited by harddrive space and not the 6-8 hour, low-quality limit of a video tape.
I can play DVD's on my computer's DVD player, but I use my AIW card to hook up a VCR so I can also watch my old VHS tapes. I also have used my AIW to capture video from some of my old tapes and convert them to MPEG and stick them on DVDs. I haven't used any of the video-out functions, which basically means you can hook up your PC to a TV.