It seems to me that this is happening with IOS8.1 (Photo Library beta enabled) and iCloud 4.0 for Windows:
- In iCloud every user still has a PhotoStream folder. if you subscribe to the Photo Library beta that is ADDED, but your old PhotoStream folder remains
- When you take photos on your iDevice the photos are copied to BOTH locations, but your iDevice (with Photo Library beta enabled) only syncs with the Photo Library.
- iCloud for Windows 4.0 only shows/syncs with the PhotoStream library
So: If a photo is taken on an iDevice it will be transferred to your iCloud Photo Library AND your old PhotoStream folder, in the cloud. Other iDevices will see the Photo Library version and sync with it. iCloud for Windows will also see the photo, but from the Photostream folder! If you delete the photo in iCloud for Windows it is deleted from PhotoStream, but NOT from Photo Library, so it is still visible on all iDevices using Photo Library. If you add a photo in iCloud for Windows it is uploaded to the PhotoStream folder, so not visible on iDevices syncing with the new Photo Library!
At least that is how it seems to be working here. Not confusing at all!