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When you share, what you are sharing is your library.
You can play any game the owner has, but you can't do it while he is playing any other game. No matter the video game, while he is playing something, you cannot play anything from his library.
I have my library shared with my girlfriend and these are some of the checks we did:
It does not matter if the other person is offline - you can play the shared games as long as you have an internet connection;
You can only play if your friend's library is free. This means that neither the owner or anyone else is using that library at that time;
If someone else has shared the library and starts playing before you, you'll have to wait until that person stops playing;
Even if you or someone else is playing, if the owner of the library starts playing, he will "eject" you from the shared game after 5 minutes;
You can not play any offline game that is not yours, because Steam verifies whether or not you have access to the game, offline or not;
All the DLC are also shared (unless the person borrowing only owns the base game).