If BitTorrent/µTorrent does not host content or files, then how am I able to stream the content? 

µTorrent Lite is a truly decentralized peer-to-peer file sharing tool. To put it plainly, you are getting the file from other devices on the internet who have the file and are sharing it. µTorrent Lite does not have any server hosting or streaming content. This is why you will sometimes incur long buffering times, or may be unable to get the full file.