Steam's new broadcasting feature is now live after the latest client update, meaning you can now watch your friends playing stuff.
You can get more info here but the short version is that adds the ability to 'Watch Game' to your friends list. You can set up various privacy options such as 'anyone can watch', meaning people can see you play from the game's hub, or limit it to a friends, requests or invite basis only.
There's a range of other fixes as well, here's the full list:
Added Steam Broadcasting. See http://steamcommunity.com/updates/broadcasting for more info.
Added in-game FPS counter to Steam Overlay
When Steam has internally scheduled a game update to be queued sometime in the future, the UI will now display a note to the user indicating that time
Fixed a crash preventing 64-bit Steamworks games from launching on older AMD processors
Fixed starting Steam if instance is already running in other local Windows user session
Fixed restoring game specific hardware mouse cursors when exiting the in-game overlay
Fixed errors in web views not localizing properly
Fixed occasional crash when trying to validate your email address
Fixed rendering the Steam Overlay in some D3D8 games.
Updated Windows Compatibility warnings
Improved synchronization and smoothness of video playback
Reduced CPU usage when drawing animated images or videos
Reduced CPU usage when interacting with the main Steam client window
Fixed to ask the user if they'd like to launch immediately or begin updating the game if an update is available but the game has been played recently
When running in 720p mode scale embedded web views so they are readable
Fixed EULA display occasionally failing to display
Revised navigation on profile menu
Fixed crash when entering a screenshot description
Fixed displaying screenshots for games added by shortcut
Fixed severe frame drop in OpenGL games that occasionally occurred on some hardware
Reduced impact on game frame rate in D3D9c games when not using hardware acceleration
Fixed a rare bug where Steam could delete user files when failing to start
Fixed some combo boxes in steam client settings accepting text input when selection must be made from dropdown
[Steam Client Update - Steam]
[Steam Broadcasting - Steam]