I have a Sony TV purchased this year. It has apps on board including YouTube and BBC iPlayer. But I don't use that. I have connected it to a PS3 on which I can play DVD and blue-ray disks, and YouTube, BBC iPlayer and Blinkbox apps. Both the TV and PS3 are, of course, connected to the internet via the home broadband.
What additional features would this kind of device give me?
I've just gotten an Amazon Fire TV (not the stick) and while you can get Youtube apps for it, I'm not sure I'll be bothered for this reason - a tablet or my phone is a superior interface for deciding what to watch. And frankly, I'm more likely to know where either is than where my TV remote is, while it'd be hard to turn around without seeing a couple of devices that can control the Chromecast in my house...
I also use it for Rdio, and (very occasionally) I cast a Chrome tab.
I have no interest in the smart TV's because of the lifetime of TVs: I've owned the TV's I've had for 5-10 years each. In that kind of timeframe, how I've wanted to use the TV has changed drastically each time.
I prefer my TV to be dumb in most ways, and instead replace the devices I use to control. The only functionality I wish for from my TV would be the ability for input sources to request volume changes, change input source, or turn the TV to/from standby.
Chromecast is £30, which is somewhere in the range of "entertainment money" for a number of people, so it doesn't necessarily have to do that much better than the alternatives.
Separating things out from the TV is preferred, as far as I'm concerned. If there's a credible Netflix competitor in 3 years, your TV isn't going to support it. A game console works if you have one, a streaming stick does the same if you don't.
It's for people who want an easy way to watch Netflix, don't have a smart TV (or have one that's out of date and no longer useful), and aren't interested in spending hundreds of dollars on a console that takes up a lot of space and wastes a lot of electricity just to watch videos. I suspect that's a pretty large market.
I want to show someone a funny YouTube video? Just send it to the TV they're sitting at. Boom, playing in up to 1080p.
It is also extremely useful for music. Like sending Google All Access there over the Christmas holidays and having a "remote control" per the phone to control the music from another room.
We have both a Samsung and Sony Smart TV, but the screen sharing on both is just awful. Only works with their proprietary devices (e.g. Sony with Xperia phones, and Samsung with Galaxy phones, etc). Chromecast works with anything that has a recent-ish version of Android.
Like you, my living room TV already has Netflix, hulu, YouTube, Pandora, etc. However, it doesn't get updates, and it's missing Amazon Prime Video (not that I care...).
What's nice is that it's portable (someone else mentioned hotels) and that I can throw one on my bedroom TV (which isn't a Smart TV).
Still, even at $20, I can't see a reason to pick one up.
Not perfect, so I use the PS3. The PS3's BBC iPlayer app is very good.
I mostly use mine to stream plex, watch youtube, show vacation photos, listen to podcasts and mirror my phone or computer to it to review powerpoint presentations or share webpages with people.
It's so cheap it's basically an impulse buy and it doesn't take up space under my TV so I forget about it until I need it. It pretty much just sort of disappears into the background.