OK, I'll start then others can correct me...
Video images can be communicated in different formats. Higher resolution images require more bandwidth, ie more data needs to be stored or communicated for every frame. Traditional TV also uses a trick called "interlacing" to let the broadcast signals take up less bandwidth.
The idea of interlacing (for TV) is that you are really only sending a new frame every 1/30 of a second, but by sending lines 1, 3, 5, 7 etc... in the first 1/60 sec and lines 2, 4, 6, 8 etc... in the second 1/60 sec the TV is able to put up what looks like a new frame every 1/60 sec (although it is missing half the lines) and you see much less flicker than you would if the TV was displaying a full frame every 1/30 sec.
OK, that was the 1930s, but the same basic format (with the addition of colour) is used to this day for analog TV and for DVDs. Yes, it's true
Fast forward to the 21st century, where your typical TV has much higher "native" resolution than the 480 line interlaced signal (aka 480i) that is broadcast on traditional TV and output from a basic DVD player.
So... you got this spiffy new HD TV that can display 720 line resolution without interlacing (aka 720 Progressive, or 720P) or 1080 line resolution with interlacing (aka 1080i). Everything good, right ? Hook it up to an HDTV cable box and see glorious high-def TV.
Now, play a DVD. The DVD is 480i. A TV from a year or two ago (or a modern mid-sized TV) only displays 720P. If the image you are displaying is anything BUT 720P then something has to convert the image from whatever it is initially (typically 480i) to 720P, by accumulating the image in a computer memory aka frame buffer and then scanning it out at a different frequency, interpolating between the lines in order to display a higher resolution picture that looks good.
Now you run into one of the most confusing aspects of HT system setup. Something needs to "upconvert" from (say) 480I DVD to 720P display. The TV can do it. Some players can do it. Heck, some receivers can do it. Most of them all do a crappy job. The challenge is to make sure that at least ONE of the pieces in the chain can do a good job, and then set all the pieces up so that piece does the upconversion.
Again, upconversion is needed to play a 480I DVD on a higher resolution plasma TV. The TV can do it. A good upconverting DVD player can probably do it better. I think the issue is that an upconverting player can intercept the DVD information before it gets displayed at 480I and can therefore avoid some quality loss and have access to some extra info which the TV can't see.
The Oppo is felt to have far and away the best video quality when upconverting for the money.
Hope this helps.