A CD-ROM copy protection technology developed and licensed by Macrovision.
It provides a range of functionality for software developers, and can be used to either lock the software so it can only be installed from the original CD, lock the software that it can only be run when the original CD is present, or require that the original CD be re-inserted every few days. You can normally tell when it has been added to a program due to the delay while the digital signature is detected, and the splash screen which is normally displayed during this period.
It sucks. There are various different versions. Some don't work with certain drives and some have illegal "cracks" to allow the software to be copied. It's generally cracked within a couple of days of the software being release, especially if the developers haven't sunk a lot of time into integrating it deeply with the game. Clone CD can be used to copy most versions, depending on whether or not your CD Writer has the necessary features. You can usually just use Daemon Tools to make a disc image and then turn on its SafeDisc emulation, too.
Easy to use, compatible. It is easy to apply, simply requiring the "wrapping" of the software with the SafeDisc software and a slight addition to the mastering process of the disc. Additional protection can be added using a special API. It's compatible with Windows and MacOS, and the newer binary releases of WineX also include support for it. It is Yellow Book compliant.
Depending on how it is used, it can considerably slow down games and other software which use it, especially at startup time.