It is a format of disk that uses blue lasers which both allow more
information to be stored in the same location, and provides a new
programming language, much sturdier DRM, ability to program out certain
players, and a different manufacturing method than DVD's. There is also
strong specifications for the player, how it treats memory, and
programmability. There is also a standard called Blu-Ray Plus. Which I
think there are only two players that meet this standard, the PS3, and a
high-end standalone model.
Blu-ray, is not inherently backwards compatible with DVD's, but almost
every single player has a dual optical pickup that allows pressed CD's
and DVD's to be played.
There is actually nothing in the DVD standard to prevent high
definition. Just that most players won't display it, and without
compression, you won't get a high enough bandwidth off the disk, and the
disks don't store enough to store an entire movie on it.
HD-DVD would have had an advantage, that existing manufacturing
equipment could have been used to make the disks.
Blu-Ray beat, or out lasted HD-DVD. And some moviephiles have the
equipment to really notice the benefits of Blu-ray with the right equipment.
However, most people and even most moviephiles find that well crafted
and well compressed DVD's are fantastic to watch, and that the
additional costs for new players, and the costs of the medium are simply
not worth it. Both formats are deeply rejected by the marketplace,
which has led to the failure of one format, and a very small wall at the
store.
It is really hard to find material where they took the care to construct
a good compression, where they are significantly better than the DVD to
make the whole thing worthwhile.
It is not as significantly better as HD-tv is to standard tv.
If you have a PS3, then you get it for free. So that makes it much less
difficult to get started.
If you are buying a DVD player that has it, it will be much more
difficult to generate a value proposition for it.