Essentially, a DVD movie is 720 pixels wide by 480 pixels high. When a cinemascope film is presented using letterbox, only about 280 of those vertical pixels are used to display what’s been filmed. The other 200 pixels (100 above, 100 below) are just black lines. When anamorphic DVDs are encoded (with rectangular pixels) , the film content gets about 380 lines, and the residual matte gets 50 lines on to 50 lines on the bottom. The result is a more detailed image when displayed on a screen that can handle rectangular pixels-- and such screens are nearly universal these days.
http://www.afterdawn.com/glossary/term.cfm/letterbox
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