It's a portable mp3 player. I get that. But you can't download songs on the john, can you? You need to hook it up to your computer to do that. So what's the big deal? Why is it so much more hyped than any other mp3 player?
Good design, good interface, good back-end software for your PC to manage your collection, good website with new music available for download (at a cost, of course). Most of the potential competitors have only had one or maybe two of these attributes. Some have none.
Of course not - are you deliberately being obtuse?
You asked what was the difference between playing streaming music (or other programs) on your desktop and on an iPod.
Let me just add that I'm an audiophile, been one for years. Thousands of dollars worth of retail music, a real turntable, the whole nine yards. But I'm also grounded enough to separate my entertainment time from life's other obligations. Wearing an iPod all day just says "hey, I'm stupid" and need my audio baby bottle to function.