Ya I get what you are doing, just asking if guys are all keeping files on your computer and syncing them to the ATV r if you are using a hack to move the only copy over there (which can be done on a hacked ATV).Your media files are stored on a hard drive that is seen by iTunes on one of your computer (i.e., its library). If you stream, then the ATV is perfectly fine out of the box. But if you sync (for better responsiveness, high-def movies, portability, et al.) then you need to increase the drive capacity of the ATV. Right now, the largest 2.5" PATA drive is 250 gb. We have modded our ATV's with a PATA to SATA adapter, which provides eSATA functionality of the ATV's hard disk bus.
If you are doing a standard sync, you are buying 2 TB+ drives, which must get expensive.