http://en.wikipedia.org/wiki/Digital_rights_management
Essentially, DRM is anti-piracy software usually built in to a game or a DVD.
It typically started out as being the software that made it difficult (made it difficult but did not prevent) to copy your PC game and give it to your friend. It's the software that makes it so you have to insert the CD into the computer to play the game.
Now developers are rewarding loyal customers who are shelling out hard cash by making them go through online verifications, install restrictions, and a whole bunch of other bullshit. This new DRM stuff treats the loyal customers like they are thiefs and acts as a minor nuisance for the pirates.
In the ongoing battle of developers vs. pirates, the pirates always win. There is always some coder who is living in his mom's basement that is going to crack whatever-the-fuck prevention put in place.
That's what DRM is.
DRM also extends to movies and even music.
Sony got the shit sued out of them for selling CDs that installed a hidden rootkit when you tried to play them in your computer. That's about as shady as DRM gets.
Here's the wikipedia link with info on the SONY scandal:
http://en.wikipedia.org/wiki/2005_So...ection_scandal