How DVD works
To understand how a Digital Video (or versatile as it was originally called) Disc works, we need to start with lasers. Lasers are absolutely amazing. A laser can scan surfaces, illuminate objects, provide a reference mark, create holes, sculpt surfaces, and do so many other things that I would need an entire article just to discuss lasers alone. Let's talk about the application of laser technology that applies to DVD, information storage.
Millions of tiny holes
Since a laser can create as well as detect holes, it makes for an excellent way to store binary data. Binary math uses only the numbers zero and one. This can also be thought of as off-or-on, yes-or-no, empty-or-full, or what have you. On a DVD surface, the transition from light to dark (the start of the hole) is "1", and the transition from dark to light (the end of the hole) as "0", for example, to generate strings of numbers.
If you could make a laser follow a regular track on a reflective disk like a needle follows the groove on a record, you could use it to both write and read data like an old phonograph. The tighter the pattern, the larger the amount of data stored.
Since the laser wouldn't actually touch the surface of the disk, there would be no wear. Wear has been the bugaboo of every mechanical method of recording data. Needles get dull, records wear out, tape heads need cleaning, tapes get eaten, and film fades. With no contact, there is no wear. That is why laser-based storage media can last indefinitely.
The current laser-based types of storage existing include the Laserdisc, CD, and DVD. They are all based on laser technology. Each of these formats are different in their method of encoding and their storage density. This is important, as it is the reason why you can fit a movie on a DVD and not on a CD, even though they are roughly the same size.
It's in the way you look at it
DVDs can hold much more data than CDs for several reasons. First, the technology has improved tremendously since the CD was invented in 1983. This means that the compression software is more sophisticated, the laser can be controlled and focused better, and manufacturing technology has allowed twice the number of pits to be created on a disc than was possible before.
A DVD has smaller pits than those on a CD placed more tightly together. In addition, A DVD can have up to two layers of data, one on top of another. By changing focus from one layer to another, the DVD's laser can read the data from both layers without missing any of the microscopic pits. Paired with powerful software compression, the amount of data storage is formidable. In household terms, a DVD can hold about 2 hrs. worth of cinema-quality picture (over 6 on a double-sided, dual-layer disc) and 5-channel (plus a dedicated subwoofer output) digital sound. DVD is the best current technology for a great home theater experience.