In the middle of watching season 5 of Weeds (which by the way is quite hilarious) the Netflix app on the Apple TV in my living room decided to stop working. Clicking “Play” simply kicked me back to the info screen for any show or movie I tried to watch. Netflix streaming worked everywhere else in my network (iPhone, XBox, etc…)
I tried logging out of Netflix and back in, reconnecting to my network, setting up Google DNS, and nothing worked.
The solution for me was to hold down the “Menu” and “Down” arrow buttons on the paired remote until the white light on the front of the Apple TV blinked rapidly. Upon releasing the buttons, the device performs a “hard reset” (similar to leaving it unplugged for 30 seconds) which clears anything it keeps in its cache, including whatever causes Netflix to get hung-up.
(Check the article in the Apple Knowledgebase if you need help.)