The whole library is online, like the Steam library. Every game will be available for download if the user has the appropriate license rights (bought the game, loaned it, player is in "family", etc.)
Cloud Gaming is a different thing. The basic idea is that some of the computing necessary for a game to run is being done on a remote server, and the results of the computation are sent to the user, who only requires a "thin client". This allows for very complex computations to be handled by the remote, so more processing power is available for the local client to use. The... thickness(?)... of the "thin client" is what I'm curious about, because there are some things that are easy to stream (results of AI heuristics, for example) and some things that are very heavy (content packages).