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.
Its still missing physical object’s killer app: permanent license transferability.
With physical objects I can buy them from others, give them to friends, etc and that transfer can be permanent.
All of this lend and automatically return is just a mechanism to block permanent license transfer.