A Steam Community announcement reveals Valve's Family Sharing plan now uses two-factor authorization to allow "lenders more control while reducing the risk of VAC or other bans resulting from an unknown user accessing and abusing shared games on an authorized machine" (thanks Polygon). Here's the deal:

We’ve made a change to the way Family Sharing works in the most recent Steam client beta, where lenders must now identify the Steam users who may access and play their shared games on shared computers. This allows lenders more control while reducing the risk of VAC or other bans resulting from an unknown user accessing and abusing shared games on an authorized machine.

Family Sharing is now a two-factor authorization process, where up to ten Steam accounts on up to ten machines may be authorized to share your library at a given time. Any of these ten users may log into any of your ten authorized machines to access and play your shared games. Additionally, users may still request access to your shared library by sending you a request from any machine where you've installed games.

To authorize up to ten family members to share your games, visit Family Sharing settings using the most recent Steam client beta update. Our FAQ have also been updated to reflect these changes.