fhw covered that pretty well so I'll just cover what he missed, the difference between DD and DTS.

The only real difference is the amount of compression and the ultimate bitrate of the audio file. DD compresses at most 12:1 while DTS tops out at about 3:1. DTS encoded files are typically left at a much higher bitrate, which means less compression and less audio has to be taken out to make it fit.

Whether or not this results in a noticeably better audio is somewhat disputed, but what is more important to me is that DTS is typically mixed with more care. The only people that actively look for a DTS audio track are those of us crazy enough to spend a [censored] load of money on all this equipment and anal enough to nitpick over sound. As a result, sound engineers SEEM to take more care in mixing the track.