Sorry, I thought Kovid was going to explain it.
The content server feature lets you access calibre and download ebooks from any other device (PC, laptop, PDA, Itouch, UMPC) on the same network. For example, I can use my N800 to download ebooks (over my Wifi network) from my main media server PC (assuming calibre is running at the time).
All you can do is download. You can't convert, upload, etc (yet).
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