The upside that you can lend a book without visiting a library; if you live in a remote area you don't need to travel; if you like reading at night you can do it; if you are a foreigner or illegal migrant, you can lend a book too.

So digital library, lending books over Internet is much better than a physical library.

Looking at it through this lens, unauthorized shadow libraries are even better than CDL.

Exactly. If you're going to defy publishers it is better to go all the way and offer ebooks actually for free instead of doing the CDL's stupid DRM scheme.