playing video files on Android device to xbmc server

When I click on a video file that my nexus tablet can't play, it asks me if I want to play it on XBMC. I assume it will attempt to stream it to my XBMC server, but it does not work. Does anyone understand this functionality?

Thanks.

Some remotes use this feature to send web video urls and youtube video links to xbmc. The apps basically tells XBMC to play an url which will work well for content streamed from the internet. But if you select a local file on your sdcard the file url sent to xbmc can't be opened since it is a local url on your device and not accessible from a different device
The only xbmc remote I know that supports sending local files to xbmc in the way you expect is Music Pump XBMC remote

There are apps that allow you to turn your android phone/tablet into a upnp server which you can either add as a source in xbmc or send to xbmc from the device (imediashare being one of a few).