The DirecTV receiver is connected to the TV tuner box (standard composite cables), which connects via USB to the computer. The computer uses Windows Media Center to access the tuner (setup required for your particular cable box), which then displays all the channels you would normally see.
You can change channels via the computer (there is an IR repeater that gets taped to the front of the cable box), and also use the computer as a DVR, assuming you have the hard drive space... currently it's set up to record to the 500GB external drive.
Hope that helps! Let me know if you have any more questions