what happens if your internet goes out? - Except for occasional phone home, you can play content offline that is stored on your Mac or PC from iTunes.
what if i don't want to turn on my macbook or PC to stream movies to my apple TV all the time -- You don't have to. The Apple TV can stream TV and Movies from your device directly. If you have iTunes match, the same is true for music.
For me it's about avoiding the storage space of physical media. I have a lot of DVDs and some blu-ray (mostly for 3d content) and it's getting to be a hassle to save space. I saw the big reduction with ebooks and it just makes sense to store everything on an external hard drive now. I can download most of it again from iTunes and I also have a backup on a second hard drive through Time Machine.