Ok, so I tried it out tonight. Everything works like you would expect a normal digital PS4 game to work. A secondary user can stream or play a downloaded game on the system that the subscriber has set as primary. The only limitation that I could find is that the secondary cannot trigger the download, the subscriber has to do that in the PS Now app. But the secondary can access the PS Now app and stream anything or play anything that's already downloaded. I'm not sure if it was different before, but it seems to be pretty flexible now.
Played around with it tonight and was pretty impressed, played some Tokyo Jungle, Ni No Kuni, and Shadow of the Beast. Everything worked really well. It didn't look quite as good as if I was playing natively, but no artifacting and I didn't notice any latency at all. There was about 1 second where the sound cut out, but that was really it.
One thing that kind of annoys me though is holes in the library. They have Dead Space 3, but not 1 and 2. Same with Resistance 3, but not 1 and 2. I'm not going to start on the third one. Hopefully they bring those back at some point.