Exactly! You add people to your "family", you can continue to play as normal but everyone in your family gets access to your games library which they can play freely. Only "catch" is: only one family member can play from your library at the same time.
Which to my mind, isn't such a big catch at all, because if you are having a good "family", and one guys library is in use, you still have 9 other people to pick out games from. It's probably only a catch for those guys looking to game the system.
This wouldnt happen, you'd only be in the family of that one account, only sharing their games. It wouldnt mean access to everyones games in the family.