I don't know if streaming video works perfectly yet, but I did try to stream a video from Vimeo yesterday in a web content overlay. I used the Embed code from the Vimeo page (click Share, then copy Embed code) and created an HTML file in Dreamweaver and inserted that code into the body. Saved the file, and added it to the web content overlay and it works.
I set the overlay dimensions to match the dimensions in the embed code, and when playing the video I was able to click on the Fullscreen icon to get it to render fullscreen but quality is based on the Vimeo source file.
The v22 release notes mention improvements with video streaming (I'm still on v21) so that tells me there might be some limitations or drawbacks currently, but I'm not knowledgeable enough about it yet to know what those might be.
I hope this helps,