The best is that you can buy the Apple TV in two sizes! 32 GB and 64 GB. Why you ask? Can the bigger one store more stuff? No, everything’s in the cloud! So what’s it for exactly? Who knows! But it’ll cost you an extra $20 and won’t even come in a different color like the “Pro” keyboards and mice. For a fun exercise go ask an Apple store employee this.
From my (admittedly now hazy) understanding, everything in Apple TV land is supposed to be purgeable. So nothing should stop working on a 32 GB Apple TV unless it for whatever reason needs 64 GB of data on disk. This will of course mean that the 64 GB model is faster in caching scenarios, but it’s IMO an unnecessarily complex decision for an already expensive product in the space ($179 for 32GB!)
I’m fairly certain that it will hold more of screensavers (at 950MB each), and they are honestly my favorite part of the device. If you don’t have broadband the idea of a bigger cache of content seems worth a nominal fee.
When the Apple TV first launched, you were limited to 200MB of an initial download and 20GB total counting later-downloaded on-demand resources. These on-demand resources in theory automatically get flushed out, so the HD space serves more like a cache. So the 32/64GB has a very tenuous relationship with performance before, and now that it's been raised to 4GB install probably will not be nearly enough space. It's a weird device.
Oh, because people are regularly installing the 7.8GB Xcode update?
Aside from the fact that I doubt anyone downloads that many apps, from my understanding Apple TV makes you use on-demand resources for anything above 4GB. That means that old resources automatically get flushed out, so the actual benefit of those extra 32GB is more of caching-feeling behavior.