Better described as Digital Restrictions Management. It is an attempt to add restrictions to data so that it can only be used in certain ways. The unfortunate fact is that this violates the basic rules of the Universe we live in, so it can only be simulated, and only through convoluted means and by using laws.

DRM necessarily means the data is encrypted in a way that is unknown to the end user. If it was not, the user could extract the information and thus bypass the Restrictions.This means that the data is not "owned" by the purchaser of it, since in fact they cannot understand it, and must not have any ability to understand it. This restriction is by far the most important legal problem with DRM.

DRM requires a program or device that will confirm that the user is allowed to use the data in some fashion, and extract the data and present it to the user. Without such a program the data is worthless. Typically today the program only checks to see if the hardware it is running on has the same serial number as the one the data was encrypted for. Also there are some attempts to prevent the user from getting at the data in any digital form, so that they cannot redirect it to an unencrypted storage, typically this is done by detecting debuggers and alterations to the operating system and refusing to run (this is very unreliable, but Microsoft is trying to push trusted computing or Palladium, which modifies the hardware to make this much easier to implement). In the ideal DRM scenario the program would be able to check anything, such as confirming that only paid users are in the room, that their credit card payments have cleared, and the data should remain encrypted until it goes into a decoder implanted in the user's brain which provides the entertainment and then erases it so the user cannot communicate it to anybody else.

This program is probably the biggest emotional reason that people dislike DRM. It necessarily must be closed-source, and also designed so that reverse-engineering is very difficult. This means that reproducing the program so that it can operate on different hardware than it was written for is impossible or illegal. Microsoft haters see this as a huge obstacle for the popularity of competing systems, as a necessary function (playing entertainment) may be impossible on such systems. Even if you are not a Linux fan, there is a certain fear that this lock-in will remove all incentive to innovate, and may lock out competition (imagine if Dell owned the programs, instead of Microsoft) and thus cause computers to go up in price. These programs can also be used to force the user into buying the hardware necessary to run them, or paying exhorbiant fees for the programs themselves, and can "protect" with equal security as the data other unwanted functions, such as forcing the user to watch advertisements, editing the content dynamically, expiring the data, and charging pay-per-view.

Technically it is virtually impossible to make DRM work. Without actual implants in your brain, there will be a form of the entertainment designed for human senses, and we have machines that can record this same form of data with far higher fidelity than the human brain can. More obviously any form of data in a physical form, such as laser pits on a disk or memory locations inside a chip, can be duplicated exactly, if there is enough incentive, and without any need to actually figure out what the data says. Those rip-off DVD's you can buy on the street are not made with DeCSS, they are mady by copying the disk, and I doubt the people who made those disk-copying machines paid even the slightest attention to the encryption, they just stuck their results in a player and checked if they worked.