What's the Difference?
To help illustrate the difference between the standard DVD we've been living with for years, Microsoft corporate vice president Amir Majidimehr explains, "The standard DVD is less than one megapixel resolution, so when you think of your camera as many megapixels, the standard DVD is very low resolution."

The problem is that there's simply vastly more resolution and detail to be found in the original films, and with standard DVD, we're just not seeing that. HD DVD will finally offer the visual quality needed to see the film as it was originally intended.

Why HD DVD?
It's no secret that there are two next-gen DVD formats hitting the market. The first to market was HD DVD and the second (indeed already out in Japan) is Blu-ray. After two years of deliberation, Microsoft made its choice and decided to back HD DVD. The question then becomes why? Here are a few reasons:

Manufacturing: Concerns developed regarding Blu-ray's ability to manufacturer the discs at the capacity originally intended. In fact, with the Blu-ray launch in Japan, the discs are being created at single-layer 25 Gigabyte capacity, which is half of the originally intended 50 gigabytes.
Easy to Damage: Because Blu-ray discs are encoded near the very top layer of the disc with limited protection, the data is literally at higher risk to damage. Conversely, HD DVD maintains physical protection similar to standard DVD.
Copy Protection: Blu-ray utilizes not one, but two different forms of copy protection, adding an extra layer of protection and complexity that just didn't appear necessary.
HD DVD Benefits
What is it that HD DVD is doing that helps differentiate itself from Blu-ray? Here are a few nuggets to chew on:

VC1 Compression: While both Blu ray and HD DVD players are required to be compatible with three different compression technologies (including VC1), an intriguing trend has already begun. Content providers (movie studios) for HD DVD are nearly unanimously using the brand new VC1 compression technology, whereas Blu-ray providers are sticking with the ten-year-old MPEG 2 compression that has been used on standard DVDs. With VC1, HD DVDs are able to compress much higher quality video into a significantly smaller package.
Capacity: Dual layer 30 GB HD DVDs are already available, whereas Blu-ray has only released its single layer, 25 GB disc.
Hybrid Disc: HD DVD offers the ability to encode both a regular DVD format and HD DVD format on the same disc. If you purchase a hybrid disc, you can flip to one side and play the movie on any standard DVD Player, and when you do get an HD DVD player you can flip to the other side and play it in true HD.
Interactivity
Quite apart from the previously mentioned features, one area where HD DVD is providing revolutionary functionality is its advanced interactive features. Check out these highlights:

Chapter Integration: Previously, on standard DVDs, you could only switch to another chapter by backing completely out of the movie (unless you scrolled through manually). Now, with HD DVD, you can bring up the chapter selection seamlessly while still watching the movie.
Bookmarks: Now standard on any HD DVD is a bookmarking ability. This allows you to "save" your favorite scenes from a movie and call them up whenever you're watching the disc. This is possible because of the persistent memory available in every HD DVD player.
In-Movie Experience: Mandatory for all HD DVD players is a secondary video decoder (not available for Blu-ray). This allows the disc to play separate video streams, which on its own completely changes the opportunities available for bonus features. That way, you can not only watch the movie, but also "watch" the behind the scenes features that apply to the scene you're watching simultaneously.
Online: All HD DVD players are required to be network capable. Of course, this is already the case for Xbox 360, but what this allows is for not only the player to be updated if needed, but new content to be distributed on the fly. The common example cited in Major Nelson's interview is that of a director recording more commentary. Now, instead of worrying about buying a new disc, that extra content is available to you as soon as you pop in the disc.

And still there also new software can provide the transformation of HD-DVD to DVD or other fomat, such as xilisoft DVD ripper and other series software and so on.