Here's a little more information on the Digital Rights Management (called fairplay) that's built into the AAC files the iTunes Music Store sells.
Tracks can be played on up to five authorized Macs. In order to play your tracks on a sixth computer you'll need to deauthorize one of the other five. That can be a royal pain if you have more than five macs lying around but I don't think many people have that problem.
iTunes will let you burn a particular playlist to CD ten times before requiring it to change as a way of stopping mass redistribution.
iTunes won't let you burn the AAC files as an MP3 CD or reencode them as MP3s. You can copy them to a disc outside of iTunes for archival purposes but they can't be played by MP3 CD players or played from an unauthorized computer. You'll need net access to authorize the new computer as well.
If you're really desperate, AAC files can be burned to CD and reripped as MP3s (or copied via Audio Hijack or some such program) but this is time-consuming, annoying and impractical. Plus, the sound quality noticably deteriorates.
Tracks can be copied to an iPod without any restrictions.
All in all it seems like a pretty fair balance between fair use and intellectual property protection. Assuming you have a Mac, of course. Windows version now available. Will wonders ever cease?