Along with iOS 4.2 (technically iOS 4.2.1), Apple team has released new firmware update (Build 8C150) for Apple TV 2G. iOS 4.2 for Apple TV 2G comes with AirPlay feature.
AirPlay on Apple TV 2G allows you to stream media content like video, images etc. from iDevices to Apple TV, which means you can watch your favorite videos on the big screen too.
You can download the latest firmware for Apple TV 2G from following download link.