The Slingbox allows A/V signals to pass through it, which it relays to any Internet-accessible device. It has an input which it takes the signal in, it compresses it using its own compression technologies, and functions as a host when connected to the Internet. You'll have to install their software on a remote-viewing device such as a laptop or cell phone, and when configured, it will communicate with Slingbox through the Internet and view any signal passed through the Slingbox. To control devices, I believe it uses an infrared control that simulates your remote control.
As for limitations, Internet congestion and slower speeds can restrict quality. There is a single input, so you will be required to buy a switchbox if you want to connect multiple sources. Also, there are currently no location-shifting/space-shifting devices that support HDTV.
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