"Streaming" is a generic term. It basically means that the data being transferred can be used immediately, without having to download the "thing" in it's entirety before it can be used.
Now, streaming doesn't have to be video only, it also for audio too. Now there are two types of streaming: "True" and "Progressive download"
"True" streaming actually means that the data is played, then discarded immediately after it is played. Hence, no local copy of the file is stored. Technically, Macromedia Flash can perform "true" streaming, however to do so requires an ensemble of server-side software plus streaming-fees, which can be rather costly. Using the "progressive download " method is the least expensive way to present audio/video on a website. Like "true" streaming, the movie "Planet of the Ape" is "progressive download " method allows a file to begin playing before it is fully downloaded.
Now as far as 'Buffer" system, it's a local (on your computer) traffic buffering, this prevent any "slow down" data on your machine, once the data pour in the bucket and the hole in the bottom of the bucket, the data pour out smoothly and if the machine suddenly slow down by other application running intensive mathematical work, the data that come out of the hole still going smoothly because data in the bucket is full at the top and being interupted. It have no effect to the bottom of the bucket. It's same concept of electricity that have built in capacitor, the input voltage fluctuated while output voltage running smooth, it's because capacitor acted as a buffer.
Now when you see a video that say "Optimize", it's because it's part of the embedded flash player run from the server, it have nothing to do with streaming or buffering.