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.
Only recently has steam gotten better at this. I’ve got my account, my kids account, and a 3rd account that owns games we may want to play, so that it doesn’t tie up either of our main accounts or if we want to have a guest use it. (all are shared to each other). Until last year, it was not super easy sharing them all, lots of logins, authorizations, etc.