Media support on Android 3.0 is extensive yet limited. It's extensive because the OS supports a wide variety of media formats. For audio, you can expect to play AAC, AMR, MP3, and XMF files. For video, the OS supports MPEG-4 and the H.263 and H.264 formats.
However, Android has a long way to go in terms of a media ecosystem. Apple has a complete lock on audio and video content, having secured licensing arrangements with just about every media company on the planet (and a few on Mars).
Meanwhile, Google seems to be sitting this one out. It has made some attempts at providing content. For example, you can use the Amazon MP3 app to purchase music, and the prices are reasonable.
Motorola claims there is a Blockbuster app in the works for the Xoom so it will be possible, at some point in the future, to rent a movie or TV show. However, there is not one standard way to rent or purchase music and movies, and that is one area where Samsung has a decided edge with the Media Hub app. The app is not perfect – the interface is not that exciting and some popular shows and movies are not available, but it is a good first attempt.
There are very few tablet apps available for media overall on Android 3.0. That will change soon hopefully – there isn't even a Pandora client for Android 3.0 yet. Of course, you can use the smartphone version of Android apps running in a small window.
Fortunately, Android 3.0 has one advantage over the iPad 2 and Samsung Galaxy Tabs: you can view Adobe Flash content in the browser (the Flash support just became available late last week). To get Flash to work, you need the latest Android update and a Flash client that is free to download.
Once installed, you can access sites like Last.fm to play music, visit rich-content sites like YouTube to play videos and even play Flash games through the browser. Hulu.com doesn't work for US users, and blocks access to content, even though the Flash files do work.