Leo says that XBMC comes from XBox Media Center. It's a lean-back interface to navigate through and watch content. Leo says it really isn't legal or illegal, but like any computer, it can be used to watch pirated movies from bittorrent and other sources. Leo likes Plex a bit more because it's more polished, but XBMC is a great player.
Tony has an AppleTV that he's hacked using FireCore and he loves it. While everything that's in FireCore is available as open source, Leo says that it's worth it to pay the $30 to have it all put together and updated regularly. Leo says if you're willing to risk jailbreaking your AppleTV, it's great. But he doesn't use it anymore because he gets everything he needs from other options.