Why should I jailbreak my AppleTV 2G? I'm confused on what extra functionality it brings. I understand you can browse the full internet with something like a typical web browser, but that doesn't interest me at all. What else is there?
Jailbreaking your ATV2, will open up the hardware to utilize software that is available to enhance your usage.
Personally I jailbroke my AppleTV2 because I wanted to be able to watch shows / movies from my home server. Shows / Movies that were NOT in apple approved format, nor were they shows that I wanted to convert and put into iTunes.
XBMC is great in that regard, as you automatically get access to a TON of options that you don't get with the standard ATV2 iOS software. Plugins for things like HULU Plus, Amazon Prime, Vimeo, etc.
The jailbreak (untethered) is very simple to do, and the tools available make the whole process painless and easy. Just google for details and follow the steps.
Another approach that you might not think of is for Canadians, who wish to view American programming (due to limitations and Geo locking). You could easily with a jailbroken TV setup a proxy that would allow someone in Canada to then view US programming without being GEO locked from places like HULU, or AMAZON PRIME, etc;
Other options are installing XBMC or Plex, and having much more control over your Apple TV - you can then play any media format, more easily access data from your other computers, access the full internet (as you pointed out) and find lots of different plugins for a range of different things.
If you are interested, you can check out this article on Lifehacker about jailbreaking and installing XBMC - it's really a very straightforward process.
If you'd like to have a play around, you can also download XBMX and Plex for your Mac or PC to see what they are all about. Good luck.