People want to "jailbreak" the Apple TV2. With version 5 of the OS, you can only do a "tethered" jailbreak, which requires you to connect the ATV2 to a computer any time you reboot the ATV2. If the ATV2 is using the older version 4 software, the jailbreak can be untethered.

People jailbreak the ATV2 so that they can install 3rd party applications like XBMC or Plex.