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Yes, Overdrive is a distributor for library materials. They serve books in standard ADE-DRM ePub and PDF, used to also do so in DRM Mobipocket but no longer since the advent of Kindle library availability, and I've heard that some library systems have DRM-free eBooks available as well.
You don't need the special Overdrive software to download eBooks. They directly serve an ADE .acsm file which you can run through ADE, or the Mobipocket/Kindle itself (well, for Mobipocket they used to at least; Kindle borrowing has not yet made its way to Canada, so I don't know if they changed anything).
The Overdrive Media Console is mainly for downloading audiobooks, as they send .odm files which are like Overdrive's special version of .acsm files and contain a pointer to the actual download, which needs to be processed through their software. You also need it to transfer DRM-ed WMA files to an iPod (it converts them to MP3 using iTunes) and possibly to a WMA-player as well. MP3 audiobooks, which are non-DRM, you can transfer directly yourself from the Overdrive folder, though the software will also offer to do it for you with a compatible player model.
Hope this helps.
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