Computer based music collection ??

Computer based music collection ??
I have read that people are getting away from cdp,ect and going to a computer based system??
How does this work and what are the pros and cons of this?
I was in a room a couple of years ago at the Rocky Mountain Audiofest that was set up with only a computer running it.
I wanted to talk to the person showing the room but they had allot of people in there and with so much to see so I wondered off.
I find this very interesting.
Would this be like hooking up a Ipod or something to your system?? Is this were music is going?