You can always play your games, and any one of your family members can be playing from your shared library at a given time.With this Family plan thing, in Angry Joe's interview with Mjr Nelson He mentioned that:
1. You can nominate 10 family members.
2. Only two people can access single player content at any one time.
3. You can share game dlc with all your nominated family. (Apparently, although this was a bit unclear).
4. MS always has that clause that the terms of usage can be changed at any time. :s
PSN ID: To_Many_Rules