Wikipedia has a couple of articles that explain the differences in some detail: http://en.wikipedia.org/wiki/Blu-ray_Disc
http://en.wikipedia.org/wiki/Dvd
Short answer, dvds are an older, smaller capacity format that uses a red laser to read and write to the disks.
Blu ray is much newer, uses a blue laser, has roughly six times as much capacity and has much tougher encryption on the commercial movies.
Edit: Hey Troy…all those links ought to keep terminator busy for a while eh? 
