Update readme after Saturday morning conversation with Dmitriy.

README.md

-# gitlab-shell: ssh access and repository management
+# gitlab-shell: git access for GitLab
 
-GitLab Shell is an application that allows you to execute git commands
-and provide ssh access to git repositories.
-It is not a Unix shell nor a replacement for Bash or Zsh.
+GitLab Shell is a progam that executes git commands for GitLab.
+GitLab Shell is not a Unix shell nor a replacement for Bash or Zsh.
+
+Hwen you access the GitLab server over ssh then GitLab Shell will:
+
+1. Checks if your ssh key is known in authrorized keys.
+1. Limits you to predefined git commands (git push, git pull, git annex).
+1. Call the GitLab Rails API to check if you are authorized
+1. It will execute the pre-receive hooks (called Git Hooks in GitLab Enterprise Edition)
+1. It will excute the action you requested
+1. Process the GitLab post-receive actions
+1. Process any custom post-receive actions
+
+If you access a GitLab server over http(s) what happens depends on if you pull from or push to the git repository.
+If you pull from git repositories over http(s) the GitLab Rails app will completely handle the authentication and execution.
+If you push to git repositories over http(s) the GitLab Rails app will not handle any authentication or execution but it will delegate the following to GitLab Shell:
+
+1. Call the GitLab Rails API to check if you are authorized
+1. It will execute the pre-receive hooks (called Git Hooks in GitLab Enterprise Edition)
+1. It will excute the action you requested
+1. Process the GitLab post-receive actions
+1. Process any custom post-receive actions
+
+Maybe you wonder why in the case of git push over http(s) the Rails app doesn't handle authentication before delegating to GitLab Shell.
+This is because GitLab Rails doesn't have the logic to interpret git push commands.
+The idea is to have these interpretation code in only one place and this is GitLab Shell so we can reuse it for ssh access.
+Actually GitLab Shell executes all git push commands without checking authorizations and relies on the pre-receive hooks to check authorizations.
+When you do a git pull command the authorizations are checked before executing the commands (either in GitLab Rails or GitLab Shell with an API call to GitLab Rails).
+The authorization checks for git pull are much simpler since you only have to check if a user can access the repo (no need to check branch permissions).
+
+An overview of the four cases described above:
+
+1. git pull over ssh  -> gitlab-shell -> API call to gitlab-rails (Authorization) -> accept or decline -> execute git command
+1. git pull over http -> gitlab-rails (AUthorization) -> accept or decline -> execute git command
+1. git push over ssh  -> gitlab-shell (git command is not executed yet) -> execute git command -> gitlab-shell pre-receive hook -> API call to gitlab-rails (authorization) -> accept or decline push
+1. git push over http -> gitlab-rails (git command is not executed yet) -> execute git command -> gitlab-shell pre-receive hook -> API call to gitlab-rails (authorization) -> accept or decline push
 
 ## Code status
 
@@ -11,7 +44,26 @@ It is not a Unix shell nor a replacement for Bash or Zsh.
 [![Code Climate](https://codeclimate.com/github/gitlabhq/gitlab-shell.png)](https://codeclimate.com/github/gitlabhq/gitlab-shell)
 [![Coverage Status](https://coveralls.io/repos/gitlabhq/gitlab-shell/badge.png?branch=master)](https://coveralls.io/r/gitlabhq/gitlab-shell)
 
-**Requires ruby 1.9+**
+## Requirements
+
+**GitLab shell will always use your system ruby (normally located at /usr/bin/ruby) and will not use the ruby your installed with a ruby version manager (such as RVM).**
+It requires ruby 2.0 or higher.
+Please uninstall any old ruby versions from your system:
+
+```
+sudo apt-get remove ruby1.8
+```
+
+Download Ruby and compile it with:
+
+```
+mkdir /tmp/ruby && cd /tmp/ruby
+curl -L --progress http://cache.ruby-lang.org/pub/ruby/2.1/ruby-2.1.5.tar.gz | tar xz
+cd ruby-2.1.5
+./configure --disable-install-rdoc
+make
+sudo make install
+```
 
 ## Setup