Weird indeed. I think we are both/all "benefitting" from Apple's trying to move more and more things to the cloud in one form or another. What to me seems a consequence of moving too the cloud is that more and more things that seem to be, or should be, only local no longer work. I suspect that one part of this is because the systems are more complicated with more things that can go wrong, and another part because the emphasis on wide area network aspects of apps leads to neglect of local-only aspects.
For me, Apple TV easily and reliable plays video and music stored in iTunes/Music or Video on my computer. I have never turned on Apple Music nor iTunes Match. I do have and use iCloud. What I want is to store on my (Mac) computer photos and video that I take, and be able to view them on my Apple TV. This works with video in iTunes on my Mac. Photos on my Mac cannot be viewed on my Apple TV unless they are first loaded into Photos, and then selected in iTunes to be Home Shared. Even though this content is nominally all local, I think Home Sharing requires some sort of interaction with iCloud. Interaction with iCloud provides possibilities for problems that are hidden from the user. When a problem occurs due to something hidden in the cloud, the solution also will be hidden. I think this is what is happening. We can see only the results: sometimes it works and sometimes it does not, with no change apparent on our systems.
In the last week, an issue with similar aspects has been documented on MacInTouch http://www.macintouch.com/. Time Machine backups to Time Capsules, a local application using a local disk, suddenly stopped working. The workaround is to turn off Back To My Mac in the Apple Airport, a wide area network application with seemingly no relation to Time Capsule. Now Apple has confirmed the issue and is working on a solution. The relevance to Apple TV issues is that Time Machine and Back To My Mac were working, then with no changes, these seemingly unrelated applications began not working due to interference with one another.
The complexity of the interaction hides the reasons for the failures from you and me. That means there is nothing we can troubleshoot and correct. As bad, the complexity of the interaction hides the reasons for the failures from Apple. The vast array of things that can go wrong with wide area networks and the diverse systems they connect can easily go unnoticed in in-house testing. Recognizing the problem, Apple commendably implemented their Public Beta Testing program. Errors are found and corrected not just in new software. Many bugs which have existed for many years have been found and corrected. Unfortunately, some remain. (No complex software is ever bug-free.) The issues we are experiencing wth Home Sharing are an example.
I think the only thing we can do is report the problem to Apple. Provide as much information as you can. That will help them find and correct the bug.
http://www.apple.com/feedback/