The same reason a picture from a 2 mega pixel camera looks worse than one from a 4 mega pixel camera.
That's right a standard DVD is equivalent to about a 0.3 megapixel image (NTSC: 720 x 480) flashing a new image on the screen 24 times every second (24fps). Blu-ray and HD-DVD use a resolution of 1920 x 1080 which is approx a 2 megapixel image at 24fps.