Family sharing allows a person to allow up to ten devices and five accounts to access any of the games in their library. Users have to be online in order to share a game. Games that use a third party launcher like Origin or Uplay may not be supported. DLC can be played as well, but only if you don; own the game already in your stem library. The biggest restriction is that a shared library can only be used by one person at a time. This means if you are playing a steam game, no one you have shared it to can play until you are finished. If a guest is playing and you load up a steam game, the other user has a few minutes to either leave the game or buy a copy.
In order to be able to use the service you must have Steam Guard enabled on your account.
Valve cautions people to choose who they share their libraries with carefully. If a guest is caught cheating or committing fraud while using your library, you will be held responsible. This could result in sharing privileges revoked or even your entire account banned.