Mounts from both factions are now shown on the tab. However, Horde and Alliance icons clearly note which mounts are faction-specific, and which faction you need to be in order to ride them. In addition, some mounts now have flavor text in the mount window that includes a little information about the mount, and where it is obtained -- whether it be via quest or vendor.
There is also a section titled Sources, which allows you to check all, uncheck all, or show mounts that are obtained via the Blizzard Pet Store. This function doesn't appear to do anything substantial just yet, but it seems like it may be a way to toggle displaying where the mounts came from, just in case you don't really want that information. That information should be clarified as the mount tab is further developed.
I have to say that I'm one of those crazy people that currently has a section of buttons dedicated to different mounts -- there are nine that I rotate between on a regular basis. When I change my transmog, I typically change what mount I'm using as well. I told you, I'm one of those people. That said, having the mounts easily accessible at the top of the list means that I don't need to clutter up any buttons with mounts anymore.
However, there's one more bonus to this favorites feature -- in the upper right-hand corner of the mounts window is a new button labeled "Summon Random Favorite Mount," and it does exactly what you would expect it to do. Clicking the button will summon one of the mounts you have listed as a favorite at random. You can place this button on one of your bars for easy access to a merry-go-round of your most treasured steeds. The only quibble I have at the moment is that there is no way to choose between flying and ground mounts for the random feature -- perhaps they'll add something for that in the future. Regardless, even though the feature isn't quite implemented completely, it's great to see the mount tab is finally getting some love.