They let you check it out for 21 days. What's kind of neat is that the Reader shows a little clock next to the book title with the number of days left. I was rather surprised by that.
I never stepped to think about the licensing issues behind libraries. I always considered them to be sort of a "freebie" by the publisher, but now I see that's just silly. I understand the reasoning, it's just weird to think of a "limited download".