They can watch you play the game, though it may look fuzzy (uncertain how the TV will look without glasses)
Forget about watch two friends go head to head. It's the two images mushed together.
The TV is pretty cool, but each player can switch between feeds while playing, taking screen-looking to a whole new level. You don't see any of the other player's screen while on your feed though.
It's also worth noting using the split-screen-full-screen thing disables 3D, since it uses the same technology to give each player different images. I've not seen how good the 3D looks on it though.
The weird thing is that the split-screen tech could technically be done on any 3DTV, issue is software.