MY Apple TV does not work with my iMac, errr

I have an Imac OSX 10.8.2. I want to use my Apple TV to stream what I watch on my computer, yet when I go to the Display option in my Preferences menu, it seems to me that I have the option to select to turn the mirror option on - and to display the mirror icon on the menu bar, but I do not see it there.
Does my IMAC support the Apple TV?
When I go to my IMAC specs, in the Display section it shows that the mirror: is... off. Can I manually turn it on somewhere els? errr! (frustated).

P.S. When I do use the Apple TV to select other options like... movies or podcast as I arrow left or right it plays an Itunes song and raises or lower the volume as I press. Not enough info in the instuctions to pacify my angst. Please help. Thanx:)