Before getting started you need a USB Stick that has been formatted to a single Mac OS Extended (Journaled) partition that uses a GUID Partition Table. You can find instructions on doing this here.
Download ATV USB Creator from here and place it on your desktop.
Double click to extract the atvusb-creator-1.0.b10.zip archive on your Desktop. A folder called atvusb-creator1.0.b10 will created.
NOTE***: Make sure there are no spaces in the folder name!
Connect a USB Stick to your computer.
From the atvusb-creator 1.0.b10 folder, double click the atvusb-creator icon
You will be informed that the application was downloaded from the Internet. Click the Open button.
From the Choose an Installation dropdown select ATV-Patchstick.
From the Installation Options dropdown select ssh tools
Make sure the correct USB stick is selected for use.
Press the Create Using --> button.
ATV USB Creator will now download the AppleTV Update DMG. If you prefer to select this file yourself you could click the Choose a DMG button.
The program will inform you when your patchstick has been completed successfully.
Notice that your USB Stick has been renamed and now contains files...
Eject the USB Stick and connect it to your AppleTV.
Hold down the Menu and - buttons on the AppleTV remote until it reboots.
Notice the Patchstick will now do its job and install SSH on the AppleTV.
When complete, remove the USB Stick from the AppleTV and unplug the device. Plug it back in to reboot.
You can now access your AppleTV via SSH to perform a host of functions and hacks. You can find many interesting tutorials for your AppleTV here
THANKS***: A big thanks to sdavilla for creating this great app!
NOTES***: Some users have reported issues with certain USB Sticks. If you have any problems try a different one... We will post more info as we get it!