All of the spaces visited are stored on HDD from what I can tell. There are "install" loads when you enter a new or refreshed area and there are basic loads that occur every time you enter a new area.
Load times seem excessively slow for the amount of data being loaded, but I realize a large chunk of the loads include streaming data from all the other avatars in a given space (each with its own unique model modifications and visuals).
Because of the way Home is structured, it does feel very compartmentalized as though each area is its own little chat room rather than one giant interconnected series of virtual space like the typical MMORPG.
Avatar data is actually stored in the user preference file (game save data). I haven't actually tried transferring this file between consoles, but I'll give it a try some time to see if it works.
Game launching is completely dependent upon individual developers to include or not bother with, so that's not something that will be "fixed" unless SCE requires mandatory Home support (bad idea IMO).
From my own observations, a lot of the users are using it specifically for hanging out and chatting about everything from games to the typical school hall banter. It's mostly the strictly gamer people who are only using it to check out new spaces, collect stuff and then log off rather than stick around and talk to people on their friends list or anyone online.
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