This was way more confusing than it had to be.
TL;DR: You can lend your digital games to friends & family for 14 days, but both consoles need to connect locally to enable this…(?)
You can’t play digital games you’ve lent out during this time. I guess the point is making it similar to giving your friend a physical game cartridge.
It depends on how it works, 14 days and then the friend has to buy it or renewed every 14 days. If it is the latter and if it eventually goes online (which I think it will with the online subscription) it is a way, not the best way but a way, to stop scammers from building up massive stolen libraries because, unlike piracy, these games would actually be getting stolen from whoever lent it out since they can’t play them. If it is 14 days and then the friend has to buy the game, it’s a stupid limit.