Internet TV is essentially watching TV programming from your computer. Is is usually divided into two categories:
Streaming (usually legal, ad-supported, provided only for a short time)
Examples:
Catch-up software: BBC iPlayer and VeohTV.
Streaming:Hulu, YouTube
Shows licensed by TV networks.
Usually free, Ad-supported.
Region restrictions (only certain countries may view certain shows)
Downloadable (usually P2P, no ads, watch anytime you want for as long as you want)
Examples:
iTunes, Amazon VOD
Viewers pay per episode.
Costs around $0.99-$3.00 per episode.
Not-so-legal examples:
P2P including Limewire, Torrents, various file hosts, Graboid.
Not officially distributed (pirates share, rip, and upload).
Free (unless you get caught)